Despite Finance Minister Lawrence Wong taking great pains and going to great lengths to explain how the government has designed the GST in such a way that it is actually progressive and not regressive, and does not hurt the poorer segment of society, the opposition WP and PSP continue to mislead on the impact of the GST hike.
The mantra of the PAP Government is that those who are well-off will pay more in taxes and receive less in benefits, and those who are less well-off will receive more in benefits and pay less in taxes.
This is why income and property taxes are being raised for the top earners in this budget.
Despite this, both the PSP and WP want to load more of the tax burden on the wealthy. Their mantra is: Look there is someone better-off who can afford to shoulder all of that burden, you don’t have to pay your fair share.
Leong Mun Wai's magic numbers
PSP Leong Mun Wai claimed that a 3% – 4% tax increase on the top 10% would yield $3 billion.
But the sums simply do not add up. Individual income taxes collected for FY2020/21 is $12.8 billion, of which 80% is contributed by the top 20% of earners. A simple calculation of a 4% increase will yield a sum no where near the $3 billion Mr Leong claimed.
GST hurts the poor the most?
Tax the wealthy more?
To raise $3.5 billion revenue for increased spending, the Government is already raising income and property taxes on the wealthy in this budget. But the WP want to tax the wealthy even more.
As Dr Tan See Leng said, our taxes must be fair but not punitive. It is unreasonable to expect the top earners alone to bear the shortfall of $3.5 billion a year, needed to fund increase spending. This is not only punitive, it is extremely punitive.
To raise $3.5 billion through income tax, the net will have to be cast wider to include the middle income class. Many people including those living in HDB estates including Sengkang and Aljunied, will have to pay more taxes. Ultimately, the WP’s proposal will end up hurting the middle-class and below Singaporeans whom the Government is trying to protect.
Spend more from reserves?
In calling for more spending from reserves, the WP has painted a false, distorted and misleading picture about our reserves.
Leader Pritam Singh said the goose should not be fatten ‘at the people’s expense’ while Ms He Tingru claimed that by saving for the future, the Government is discounting the needs of the current generation. These are false arguments. The Government has dug deep into the reserves to spend on Singaporeans during this pandemic. It has spent $37 billion thus far and more may need to be spent from the reserves given that we are not out of the wood yet as far as COVID-19 is concerned and given the unfolding Russia-Ukraine crisis in Europe.
We live in a volatile world that is increasingly fragmented. Our children and the generations after them will have more – not fewer – emergencies to contend with. As a small country with an open economy, we will always be at the mercy of external forces. We must ensure that we have sufficient resources to defend and protect ourselves. As Mr Wong said, “In the years to come, we will need to deal with many other major and pressing challenges, including global warming and rising sea levels, as well as future public health emergencies, which public health experts are predicting will happen with increasing frequency.”
Today, we are thankful that our forefathers did not take the easy way out. They were disciplined. They kept faith with future generations (that is, us today), and so we benefit from the reserves they had so painstakingly built up. They cared about us, their future generations. “So what about us? what should our attitude be?”
Use land sales proceeds?
Land is a finite asset in Singapore. When we sell land, we are not creating wealth. We are merely converting a physical asset into a financial asset.
The WP and the PSP want the government to sell our land assets and use their proceeds to fund spending. The money, once spent, is gone. The surest way to go bankrupt is to sell your assets for money to spend.
Proceeds from land sales are already being used for spending. But it is done in a different way that generates a stream of income that can be used for budget after budget.
The proceeds are reinvested. And 50% of the income generated from investments is used for spending. This is creating wealth from an asset first, before spending what you have created. This is the sustainable way.
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