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Reflections on Budget 2008

Posted by theonlinecitizen on February 22, 2008

By Eric Tan Heng Chong

My parents taught me to be gracious when you receive a gift, and not to scrutinise it. This year Singaporeans received a ‘gift’ in the form of the Budget. There are many good things about the Budget for both individuals and corporations.

But despite what my parents taught me, I cannot help feeling that perhaps I must re-examine these gifts. My instincts tell me that the giver once took a lot from me and is now only returning some to me. I remember the increases in taxes and charges; these were permanent. The gifts to me now are one-off goodies.

I recognise that sometimes, for the greater good, I must suffer some loss. The taking, however, is becoming too much to bear, and the reasons given for it not good enough. It is time the government takes less and gives some back. I would suggest the following ways to do it:

Remove GST for essential goods like food, utilities and clothing. This a 7 per cent reduction in the price of these goods and will certainly be a significant off set against inflation. Furthermore this reduction will benefit all segments of society.

Reduce the tax on petroleum and diesel. This will reduce transportation costs for all. In 2007, the government collected S$373.1 million in petroleum excise duties. In the 2008 Budget they plan to collect S$381.6 million. I believe that there is flexibility for them to tax less in this category.

Reduce the cost of public housing by not benchmarking the price to private housing. Currently, the government decides the cost of HDB flats based on how much private housing costs, and forgets that it is providing subsided government housing. This is only a market price subsidy. The government should instead base the price of HDB flats as a discount on the cost price (including land cost), making it a real cash subsidy. There is no point in pricing the flat high and then giving discounts or grants to selected groups.

Freeze price increases wherever possible. I am not convinced that some of the increased charges are justified. While the government tells us that it is very concerned about inflation, it proposes raising university fees, Medishield premiums, ERP charges etc. These increased fees are a double whammy for the average man in the street. The government tells us that it has no control on inflation for many goods, but it certainly has control over these charges—it is the government’s duty to bear the higher costs in these cases, for they are in essential areas of education, healthcare and transport.

We, the common people, are not asking for handouts, one-off or otherwise. We are only asking the government to take less money away from us. The next question that comes to mind, then, is how to make up for the reduction in government revenues, should these measures be taken.

Perhaps a major cost-saving initiative in the budget can do this.

Since the government told the people not to expect such goodies next year as there is no certainty that the economy will continue to do well, it is prudent for the government to maintain a lean cost structure and plan for some cost savings. This year’s Budget did not have any visible major cost-saving initiative—in fact, there was a plan to increase operating expenditure by 10.6% in 2008 as compared to 2007. This increase amounts to S$2.78 billion, and perhaps a re-examination of it is necessary.

A reduction in operating expenditure would free up some funds for the government to help the people. The former Speaker of Parliament in 2002 spoke up against excessive government expenditure, calling some government buildings “The Seven Wonders of Singapore”. This is one such accolade that we can do without.

Perhaps I am not living up to my parents’ expectations in being gracious in accepting gifts. But true givers give from their own bounty without expecting anything in return. The money that we are being given now is not even their money; it is the people’s money, our money.

I recently met a businessman and asked him what he thought of the budget. He replied that he was just waiting for when they will collect it (the money) back. I hope he is wrong, and that the next Budget will take less and give some.

About the author: Eric is a member of The Workers’ Party. The above article is written in his personal capacity and as a brief commentary on the Budget.

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15 Responses to “Reflections on Budget 2008”

  1. Alan Wong said

    People often says charity begins at home. The exact opposite is true for our unique Singapore.

    Just compare the haste at how GIC/Temasek is willing to spend billions of our surplus funds to rescue foreign banks at the brink of financial disaster but will balk by taking more than a year to finally increase the public assistance (PA) from S$290 to S$330 per person, which not only costs slightly more than S$1m annually but is provided to only a mere 3000 people on PA. On the other hand, each of our Cabinet Ministers will be enjoying million-dollar salary increases for years to come.

    One wonders why was there never a public debate on using our massive surplus funds for GIC/Temasek investments while the PA S$40 monthly increases was made only after a lengthy public debate, with our infamous Minister questioning whether those on public assistance should ever expect to be able to eat at our respectable foodcourts or restaurants.

    We can safely say with hindsight that afterall, the 2% GST increase was NECESSARY to provide for the obscene salary increases for our Ministers and not really to help the poor. This is because as according to what one of our cocky ministers has implied, it is not so simple as that of using our CPF funds for GIC/Temasek investments.

    Such actions speaks volume of our elite Gahmen Minsters which is like telling us to get out of their uncaring face.

  2. Robert HO said

    RH:
    1. Thank you Mr Eric TAN Heng Chong for your excellent points. I am in total agreement with all of them.

    2. Remove GST on necessities: agree. Good call. Reduce taxes on petrol/diesel: agree. Are these taxes taxed on %? If so, then it may be time to cap or change the formula. Since crude has risen to over US$100 [yesterday], and these taxes were set decades ago when crude was ~US$30, obviously if % based, then the very high base numbers now will result in huge taxes. So, cap them or change the taxing formula. Time to relook and rethink this.

    3. This brings me to the point: TAX TO A PURPOSE. Calculate what the next Budget needs by way of spending and then tax to raise that sum. Put in a ~10% extra margin or buffer if need be, for safety, BUT DO NOT OVERTAX. Neither should the govt UNDERSPEND, especially on the poor or on healthcare. This policy of Tax To A Purpose is now possible BECAUSE WE ALREADY HAVE HUGE RESERVES — more than US$300 billion, I believe, and no longer need fear national insolvency or bankruptcy. On the contrary, this huge and continually escalating reserves has created careless, selfish, self-aggrandising tendencies to abuse the “weight” of billions for LIE KY’s own personal selfish interests, such as being invited into the Boardrooms of some very prestigious companies, which he otherwise would not qualify for, since his talents are so limited. It also gives him a bigger welcome from Paris to Moscow which he otherwise would not get. So OUR monies are used strictly to enhance his ego.

    4. Reduce HDB prices: agree. Sigh. We all know it is a total scam. The LIEgime OVERPRICES HDB prices, in which ~90% of us live. This pushes up prices of private property as well, so we have no alternative — further ensured by pricing govt land to private developers at such high prices they cannot sell flats lower than HDB, so ensuring its total monopoly and power over us. We are captives. Who says Singapore has no oil or natural resources? The population are a source of black gold that never runs out, that can be tapped on demand and exploited by future generations of nepotic LIEs. Better than oil.

    5. Freeze prices: agree. Tax To A Purpose. Not exploit every tax and money-generator to the hilt. The whole machinery and raison d’etre of govt have long been transmogrified into mere money making, no different from operating a casino. In fact, the 2 casinos [even more if more suckers want to invest, as suggested by the MentorMORON] prove that the Singapore Govt is essentially a Casino Management, forsaking principles, ethics, morals, welfare of its people, for money, money, money. Rigging elections only ensures that this vastly profitable casino can continue indefinitely, without consequences from voters, since ballots boxes are routinely stuffed with fake PAP votes [see my blog for proof].

    6. Slim down the Obese Govt: agree. When the Casino Govt is able to rake in such huge, stupendous profits decade after decade, by spending as little as possible and making us pay for everything that used to be ‘subsidised’ [another scam word, usually] and operating every service monopoly to market rates, we end up paying more and more, so even wage increases cannot keep up with this continuous, ongoing Rape of the People. Woe to those who lose their jobs. For these, only an undignified, nay, shameful, pitiful, existence is grudgingly allowed, with deliberate indignities rubbed in to discourage others who may be tempted to ask for Public Assistance. The 7 Wonders of Singapore and the bloated salaries of the Ministers and Cronies, all are symptoms of this disease of Obesity. If not for the automatic efficiencies of the 3Highs [High Density Living = High Efficiencies = High Quality of Life] and IT [also read my blog post on Why Inflation Should Be 0 Or Negative], the Obese Govt would have ballooned into grotesque form by now. As it is, the LIEgime is a pretty Ugly entity, as we all know.

    7. Thank you, Mr Eric TAN Heng Chong and TOC, for triggering these thoughts, which I would never have thought otherwise since I don’t read PAPaganda media.

  3. Andrew Ong said

    I think this year’s Budget had a little more heart and soul compared to previous years. This year, I was quite glad that more attention was given on the people, us rather on the business community.

    Ya it might be true that what they presented might be peanuts or short-changed. But I think we should give credit where credit is due.

    As our government is known to be $$economic-driven$$, hence it heartening to observe one of the rare times that they did not kow-tow to investors/business community. The “goodies” were given to the people, Singaporeans.

    Only thing I did not agree was the trumpeting of the government’s HONG BAO splashed over the media following the Budget.

    Cos the HONG BAO rightfully should be given to fellow Singaporeans who have slogged for the economy and which also provides the high salaries of our Ministers. So what is there to tell the world.

    However, how good the initiatives were presented from the Budget, I think we should be cautious what other moves in the near future our government will take which will inevitably cost us Singaporeans to return back 1 or multiple folds to our government.

    I guess we can just be thankful for now and brace ourselves for what may lie ahead for us in 2008 especially in this economic slowdown.

  4. AY said

    The reason of taking so much from the people is very simple. The government’s kitty (which belongs to the people) is actually empty. The government has to quickly top up before anybody finds out. They are have only 9 covers and 10 open dustbins and MARK MY WORDS ONE DAY – ALL THESE SECRETS WILL SURFACE AND WILL BE EXPOSED. Singaporeans will then be made to look so stupid that we have been conned and had done nothing about it!

  5. guojun said

    And we are all waiting with bated breath for that to happen…

  6. b said

    I applaud the spirit in which this article is written, in which to help the average man on the street. Personally, I agree with removing GST from essentials like food (but not utilities). A model that could be followed would be that of the USA, where certain essential goods for survival are not taxed while other goods which are not so much of a necessity are taxed.

    However, I would disagree with the proposal to reduce tax on petrol and diesel and also the argument that “it is the government’s duty to bear the costs” in education, healthcare and transport.

    It seems that reduction of tax on petrol and diesel will only encourage a higher usage of these inefficient means of transport, in terms of passenger capacity per unit of petrol/diesel used. Besides, it seems that instead of helping the ‘average’ man on the street, it is helping the more affluent classes, the people who could afford such a mode of transport, as cars are pretty much expensive to start with. This is simple economics, a tax to correct for the negative externalities that arises from usage of petrol/diesel.

    Although I do agree that the government should bear some of the costs of education, healthcare and transport, it should not be the case where the government bear ALL of these costs. In my humble opinion, I would think the government’s role is more of a redistributive one, which puts it between the spectrum of a minimal government and a overly intrusive government(There’s plenty of literature around about the arguments for and against these, which I shall not elaborate here). The meaning I derive from the above article would be to allow all benefits to be separated equally, which I’m not entirely sure whether the writer means this. This said though, there’s still much that could be done with regards to the realms the writer mentioned, and I’m definitely not advocating a status quo stance to be adopted.

    cheers.

  7. Duped again!

    Who’s money is it anyway?

    HONG BAO Budget?

    Methinks a PEH KIM Budget is a more appropriate description!

    For those less familiar, Peh Kim is donation for the bereaved.

    Especially with the abolition of Estate Duty 🙂

    And yes, it’s a Royal Flush again for the Fat Cats with Million$ salary who want us out of their uncaring face!

    Oh, there’s another $40 for the poorest of the poor on PA.

    Do they really care???

    Or is it the same old wayang???

    Cheers,

    Feedmetothefish

  8. familyman said

    B said “In my humble opinion, I would think the government’s role is more of a redistributive one, which puts it between the spectrum of a minimal government and a overly intrusive government”
    I thought that was funny when all the ministers received million dollar salary and PM Lee decided to ‘redistribute’ this by setting aside $300,000 of his personal salary for ITE scholarship. Yep, your usual govt PR bullshit. Why the need to raise GST? to raise the minister salary! So while the people (including those with $300 PA) have to pay a higher GST the rest of our lives, the ministers get million dollar salary the rest of their lives, we get a one time donation from PM to soothe the anger of the populace. Watch out, GCT and MM Lee mentioned about the lack of 4th generation leaders. Sound like another bigh pay rise coming for ministers – $$ same shit , different day. more pay to attact talent, more ERP to curb traffic jams..more $$

  9. citizen said

    One issue that has not been highlighted sufficiently.

    Who was the person responsible for the forecast of deficit of $700m ? Of course we are now told that that forecast was not that accurate. The actual turned out to be a surplus of $6.4 billion.

    Is there no sense of accountability in the government ?

    Message sent out: For future forecasts, don’t expect high degree of accuracy …. take the number and factor in +/- $7 billion !

  10. b said

    familyman:

    This is a gross mis-quotation out of the context I was talking about. I must first substantiate that I do not agree with the high ministers’ pay, and furthermore I could not see the logic of how the ‘redistribution’ of personal pay relates to the overall redistributive role that the government plays in the economy. This seems like 2 completely separate realms we’re talking about here, the personal realm and the public realm.

    cheers

  11. familyman said

    Thanks B

    You are right. The personal realm should have kept personal and not put up a sham ‘public statement’. He should shut the F up unless he intends to rescind the ministeral pay increase for all time, not for x number of years only. The last GST increase is a big joke, that is all. Help the poor ie poor folks on PA increase by $30 dollars per month, while the ministers had a couple of hundred thousand dollars increase. Reading today’s ST, it sickens me that old folks with poor children / poor grandchildren are finding it tough to get onto PA, regardless of the possible sorry state their children’s financial state may be. Thus the high suicide rate of those over 60 in singapore.
    And while the MM and SM moans about the difficulty of attracting a 4th generation of leaders, Singapore can expect another round of minister’s salary increase. Huat Ah!!

  12. mymoney! said

    I have been following up on this fantastic HOngbao budget mind you, not from the PAP-controlled media, and though it is splashed all over the place,but from this website. I find it just incredulous that an addition of 40 SGD to the PA scheme could really make any contribution the poor in Singapore at all. WHy can’t the LKY monarchy and their subjects realise that 40SGD can’t even buy a decent pair of shoes in Singapore?
    What’s most infuriating was the one of the posts in Forum (Straits times)today that the “sandwiched” middle class has apparently alot more disposable cash to buy LCD TVs, branded apparel and really doesn’t deserve any monetary sympathy (in terms of handouts or subsidies) from the govt?!Come on, haven’t this chap heard of credit cards and interest-free instalments? Does anyone splurge in cash nowadays?No what!
    Whilst the govt is draining ever last bit of patriotism and loyalty from me I lie in bed wondering if I could still live on 330 SGD if I ever get retrenched. So should I take my CPF and migrate altogether?

  13. sol said

    In the news the closest they will get is provide a number of determinants to the standard of living here—no one has ever gone out to ask whether the general feel of the standard has risen or fallen. That’s only because the answer is more or less expected to be the latter.

    I still think it’s quite important, nonetheless, that the term is more often used. The reading public will usually complain about the rising cost of living, but I think it’s important to go beyond that if they want anything to be done.

    On my part I would say that the three major contributors to the falling standard would be, in no order of importance, the perpetually rising cost of living, increasing pace of life and decreasing sense of ownership.

  14. […] by The Singapore Daily on 25 February 2008 Budget 2008 – The Online Citizen: Reflections on Budget 2008 – Diary of A Singaporean Mind: Lucky to be a citizen of an affluent […]

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