Saturday, February 17, 2007
Budget 2007Well, having lessons at 4pm, I've only managed to watch the start of the Budget 'live' on CNA on Thursday.
Instead of a fiscal suggestion, as what was reported in the Straits Times today, it turned out to be a National Day Rally speech instead, with all the all-inspiring speech made with a kind and gentle face in the shape of Mr Tharman Shanmugaratnam (wow I can spell it!).
So, I had to turn to the Straits Times this morning for the report and highlights of the Budget this year.
Wow, how surprised I was! The Straits Times had glittering, encouraging and sensational reports of what the Singaporean public will be benefitting from this budget. We'll get rebates in ultility and conservancy bills, property tax rebates, lower road tax, a Public Transport Fund, 90% subsidy for kindergarden fees, 80% subsidy for post-diploma courses, reduced maid levy, Cess of 1% to be abolished in restaurants, WORKFARE BONUSES AND GST CREDITS!!!!
"Budget 2007: Poised for the future","Wage-boost for lower income", "Corporate tax cut, CPF rate up", "Govt shows its capitalist head, socialist heart", screamed the headlines.
The 'goodies' were even given coloured illustrations.
For a moment, instead of an 'objective, serious' report, I thought it was an advertisement for Shing Sheong's CNY sale or something.
The budget is good undeniably, but by giving such a sensational, colourful report of the budget kind of spoils the 'objectivity' supposedly needed in the mainstream press.
But well, God (or the Devil, depending on how you see it) is in the details. So digging amongst the stockpile of congratulatory messages and commentary, I managed to find out some details.
Being the ever-selfish Singaporean, I first look at what 'goodies' will I get, since this is the first year I got considered in the Budget as an 'adult' Singaporean.
(Source: Sg govt media release: Budget 2007)Basically, Line 2 is what the families will spend due to the GST hike, and Line 3 what the families will get.
At first glance, one will exclaim, wow! Everyone will benefit from the GST rise! All the amounts from Line 3 exceeds that of Line 2!!!
But again, God is in the details.
Firstly, the Line 2 is based on the 2002/03 Household Expenditure survey. How relavant is it today? Well, it's up to you to decide. Question: Where is the survey for 2005/06??
Secondly, Line 3 includes almost EVERYTHING, e.g. GST credits, Senior Citizens' Bonus, U-save rebates etc (read the fine print yourself). Erm, I thought BEFORE the GST hike, there were already these rebates in place?!?!? Didn't we have ultility rebates from around April to July last year? Why make it sound as if ALL the benefits we get from the state come from the GST hike?? Surely the money come from elsewhere as well??
Most importantly, any educated person with slighty-above-average IQ would have noticed by now, the Line 3 is the TOTAL benefits from FIVE YEARS, while Line 2 is the extra GST you have to pay for ONE YEAR!! What a creative way to present data! By comparing the benefits of FIVE YEARS vs the extra payment due to the GST in ONE YEAR, it is sure to make the benefits waaaaaaaaaaay higher than the extra payment due to the GST. Maybe I could try this method of rigging data in my Honours' Thesis in 3 years' time. hmm.
So, as my family do not have small children and zero low-income workers, what we'll (as a whole family) get is $800 per year (excluding the ultilities, service and conservancy rebates which were ALREADY in place), and assuming the calculations of the above annex is true (extra GST burden = $690), we'll only benefit $110 per year. Well, if my school frees of approximately $6000 per year is added, the extra GST will be paid will be added a further $120. hmm.
So maybe for me, being in the so-called 'sandwiched' class, the increase in GST is perhaps negative for me instead of positive.
I can understand the government's direction of shifting direct taxes to indirect taxes.
Firstly, we need to cut coporate taxes to make us more competative in the global market to woo foreign investors.
Secondly, as pointed out by my JC economics tutor Mrs Than, as our population ages, the tax base for direct taxes will shrink.. hence, to make sure the government's revenues are not compromised, we have to gradually shift our tax base from an direct one (income and coporate tax) to a indirect one (GST).
Well by both counts I agree with the government, but I worry for some sectors of our society.
The Workfare bonus is only available to those who work but are receiving wages of $1000 or less.. this is a good move, as it kinda gives them a pulling hand in a world of deflated wages for the lower income.
However, I worry for those who are jobless. In economics, there are people whom we call the 'discouraged' workers - those who tried to find jobs, but gave up after being consistently unable to find desirable jobs.
Also, I worry for people whom due to some sickness they have to visit the hospital frequently or be hospitalised. This situation is only going to hit them doubly hard. First by missing out on the Workfare, and second, hit by the extra 2% in GST when they consume healthcare (we know how expensive healthcare is these days, and 2% is A LOT to these poor people)
Therefore, other than just supplementing low-wage workers, it would be a lot more helpful that a fund could be set aside to help these people deal with the ever-increasing cost of healthcare or by exempting low-income/assets people from GST in healthcare, especially when healthcare is really so bloody expensive these days.
Blogger
Molly Meek is very sharp. She noticed all how these calculations are based on the INCREASE in GST, instead of the TOTAL GST paid. The assumption will be such: the people would be already USED TO the old GST rate, so therefore, when calculating the costs and the benefits, we only need to calculate the INCREASE, not the TOTAL. Good measure? You decide.
The new GST credits last until 2010. Why 2010? Something I'm quite sure of is that, come 2011 (you can hold me to that in 4 years' time), we'll get one big lump sum. For what? Politically-savvy people should know what special year that is. The government is kinda 'storing' the extra revenue to be released on that 'special year'.
But beyond that? I think the GST is here to stay, and if any offset packages were to be offered after 2011, it would just to offset any further INCREASE from the 7%. The previous 7% would be forgetten, and we'll be stuck with it.
In conclusion, other than the suggestions I've made, this is quite a good Budget. Most importantly, as learnt from Jack Neo's movie 'Just Follow Law', perhaps more flexibility could be exercised when helping the lower-income/assets people in subsidising their healthcare, housing, ultilities, transport needs etc. Also, the government must really put in effort to reach out to these poor people, as they are the ones who are usually not so literate/aware, yet at the same time, need the most help, so to really make Singapore a pragmatic yet all-inclusive society.
Most importantly, we shouldn't treat this Budget as if it is the final, nailed-on one. It's just a 'suggestion' by the Finance Ministry.
The Parliament hasn't passed it, isn't it? =)
lowtide blogged @
2:49 pm
