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Burning Questions

Cost of Living Jobs & Income Housing Immigration Healthcare & Ageing


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Burning Questions

Cost of living Q

Is Singapore becoming too expensive for Singaporeans?

A

Singapore relies entirely on imports to sustain and feed her population and prices of these are determined by markets outside the island. However, the government makes it a point to help those who are needy. It will not leave anyone behind. Help is provided from four different angles, so that its impact will be broad-based and long-lasting. There is: • A share in the nation’s prosperity, with more benefits for lower-income families The government regularly shares Budget surpluses with Singaporeans, with the lower-income getting more. This year, for instance, the government is distributing $3.2 billion. The average Singaporean family will get about $3,000 in benefits. The direct help given this year to lower- and middle-income households will be much more than the higher living costs they are expected to face this year as a result of inflation.

Lower-income households, say parents with two children, one in childcare, the other in primary school, will receive about $3,500 each. Their costs though would increase by about $750. Middle-income households will receive enough to cover twice the expected increase in costs they are likely to face. • Opportunities to work and incentives to stay employed, so Singaporeans can be self-reliant Low-wage workers who stay employed are rewarded with supplements and bonuses under Workfare. These have been handed out since 2007 and have cost the government $840 million. Meanwhile, the Ministry of Manpower and the Workforce Development Agency have been working with Community Development Councils and self-help groups to find jobs for the unemployed. The government also has a programme – SPUR – under which workers can develop new skills continually. Under the Skills Qualifications frame-

work, 130,800 low-skilled workers were given training, while the Job-Re-Creation Programme helped more than 47,000 lowwage workers acquire better skills, better jobs and better pay. There is also temporary financial, medical and educational assistance available to help tide people over short periods of discomfort and to raise their skills, so they can look for better-paying jobs. • Access to good education for children. This will, in turn, open up further and better opportunities for the youngsters in future The Ministry of Education’s Financial Assistance Scheme provided a boost for 40,730 needy students. There are also subsidies available for childcare and kindergarten fees. Every year, 11,000 children benefit from this. From this year, these schemes are being enhanced and extended to families with household incomes of up to $3,500. As a result, 24,000 children will be given a hand. A child from a lower-income family today could be paying just 1 per cent of the cost of his education.


Burning Questions

Q

Why doesn’t Singapore cut the GST to lower costs?

A

Cutting the GST will benefit the rich more than the poor. This is because most of the GST is paid by higher-income Singaporeans and foreigners. However, most of the benefits that the government provides are given to lower- and middle-income Singaporeans. With the GST collected from those with higher-incomes and foreigners, the government can pay for Workfare and extra subsidies to lower- and middle-income Singaporeans. These targeted benefits are more effective than a GST cut in helping these

two groups of people. When the GST was raised from 5 per cent to 7 per cent, lower-income Singaporeans received even more in return. Since 2008: • Higher-income families and foreigners have contributed 75 per cent of the total GST collected • The bottom 75 per cent of Singaporean households have contributed only 25 per cent of the total GST collected • Lower-income households have benefitted far more from the Grow & Share Package and the targeted schemes in the Budget, than if the GST rate had been cut.

Total GST collected

Higher-income families and foreigners contribute 75% of total GST collected

For every $1 more GST that lower-income Singaporeans have paid, they have been given back: • $3 in additional permanent benefits. This includes Workfare, as well as additional financial assistance for childcare and education, and for ComCare. All these were introduced following the increase in the GST from 5 per cent to 7 per cent. • another $2 in temporary GST offsets.

• Support to meet their immediate dayto-day needs One way this is done is through the ComCare Endowment Fund, to which another $500 million has been added this year.

Q

Why doesn’t the Government share more of the country’s surpluses and reserves with Singaporeans?

A

The reserves are for rainy days. When the global recession hit in 2008, Singapore had the reserves to help Singaporeans stay in their jobs. The government did not need to borrow to do this. Many western countries did and are struggling to avoid defaulting on their loans. A prudent government serves the country and her people better in the long run through fair taxes and Budget benefits. In this way, wealth is transferred from the rich to the poor without over-taxing the rich. This is done by having a lean and efficient government.

The bottom 75% of Singapore households contribute only 25% of total GST collected

Q

Why not exempt basic necessities from GST to help lower-income Singaporeans?

A

GST is not paid by subsidised patients in public hospitals and polyclinics. It is also not levied on fees charged in schools and tertiary institutions. The government absorbs the GST in both areas. However, most of the GST on other basic necessities is paid by higher-income groups and foreigners. It is therefore better to collect GST on all these items, and use the money collected to increase benefits for lower-income Singaporeans.

It is also difficult to decide what items are basic necessities and what are not. For example, if flour and sugar are basic necessities, how about biscuits and cakes? If bananas are a necessity, what about strawberries? Having different GST rates for different products would also increase business costs, which would be passed on to consumers. The better way to help Singaporeans in need is to have the same GST rate for all items. The GST can then be kept lower – at 7 per cent – and the government can use the revenue to directly help lowerand middle-income families. This is what the government is doing.

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