As one of the most, if not the most, expensive cities in the world, the rising cost of living in Singapore is a central concern for the people.
This was the SDP's focus in this afternoon's launch of our policy A Better Life For All: Lowering the Cost of Living In Singapore.
Despite PM Lee Hsien Loong's to “work with you to solve problems like the cost of living” during the GE in 2015, the PAP and government increased, or intends to increase, prices on a slew of items including water, carpark, sugar, electricity, GST, etc.
This resulted in the government collecting nearly $20 billion in budget surpluses over the last three years.
What is particularly difficult to accept is that DPM Tharman Shanmugaratnam had declared in his Budget 2015 speech that all the increased spending were sufficiently funded until 2020.
To temper this rising cost of living, we proposed 10 measures:
1. Cut ministerial pay to fund assistance schemes for the poor
Ministerial salaries be reduced with the savings channelled to fund a scheme to provide financial support for the poorest of our poor. If the salaries are reduced according to our formula proposed in our policy paper Ethical salaries for a public-centred government, the PM's salary would be reduced from the current $2.2 million a year to about $0.67 million a year.
The total savings from the pay reduction of the entire cabinet is conservatively estimated to be about $10 million to $12 million a year. This amount would go towards providing seed funding for for the elderly and poor.
PM Lee said in the 2015 GE: “Let us be prepared to buckle, work even sacrifice.” Our ministers must lead by example, not mere exhortations. Otherwise, they will lose even more of their fast-diminishing moral authority, and it would be difficult to govern effectively without the people's respect and trust.
2. Raise income tax rate for the top 1 percent
In 2007, Singapore’s highest personal income tax rate was cut from 28 percent to 20 percent. The SDP proposes that the tax bracket for the top 1 percent earners be brought back up to 28 percent. Experts estimate that raising the top marginal income tax rate by 1 percentage point could result in the government’s tax revenue increasing by approximately $300 million. The additional revenue will go a long way to provide further financial relief for low-income families.
3. Ensure revenue neutral budgets
Rather than register huge surpluses every year, the government should collect in taxes only the amount that it needs. If it says, as DPM Tharman did in 2015, that the government has all its spending needs taken care of for the rest of the decade, then it should not raise taxes, fees and other charges during this period.
4. Scrap GST for essential items, raise GST for luxury goods
Basic food items as well as other basic necessities such as medical treatment and school supplies should not be subject to the GST. This is to protect poorer households from regressive taxation. To offset the reduction in revenue, the GST rate for luxury items should be increased to 10 percent or more. Presently, a poor family buying medicine or school textbooks is taxed at the same rate as a wealthy one buying a branded handbag worth thousands of dollars.
5. Legislate minimum wage
Legislation of minimum wage ensures that low-income workers are not exploited and that economic growth occurs in a fair and sustainable manner. Minimum wage will also help to reduce income inequality as well as reduce the demand for foreign workers.
6. Reinstate estate duty
The SDP proposes that the estate duty tax which was abolished in 2008 be brought back. Even PAP MPs are now calling for wealth and inheritance taxes to be reinstated.
7. Reduce healthcare costs
The commercialisation of medical care in Singapore as well as levying the GST on health-related expenses adds to the financial burden of the people. This is issue is discussed in greater detail in our healthcare policy titled National healthcare plan: Caring for all Singaporeans. Briefly, the SDP plan proposes replacing the Medisave, MediShield, and Medifund schemes with a single-payer system to reduce the burden of health care expenditure on our people. A main feature of our policy is the provision of universal care which ensures that the elderly poor and those without income are not left behind.
8. Lower HDB prices
HDB flats have become unaffordable for Singaporeans. The use of our CPF savings meant for retirement to fund HDB flats means that retirees will be left with little to live on in their twilight years. To ensure that there are adequate retirement savings, the SDP puts forward our proposal of the Non-Open Market (NOM) flats. This category of flats is sold at cost (minus land cost) and will not be allowed to be sold on the open market. The exclusion of the cost of land will effectively halve flat prices, thus allowing home-owners to save their CPF for retirement. For a detailed presentation of this idea, please read our policy paper Housing a nation: Sound policies for a secure future.
9. Return CPF savings
Withholding retirees' savings through the Retirement Sum Scheme makes it immensely difficult for the elderly to survive. This scheme must be abolished and the funds returned to Singaporeans at the age of 55. An “opt-in” clause could be introduced for members who wish to have their CPF funds retained and returned in instalments.
10. Stop profligate public spending
The government must be held to strict account how it spends the people's taxes. Lavish and unnecessary expenditure such as $880,000 rubbish centres and $1,500 bus-stop seats must cease. To do this, an effective opposition presence in Parliament, one that will meaningfully and competently examine records and question the ministers, is essential.
Our alternative ideas are guided by our belief that it is the people who should take the lead in driving the economy (as opposed to the current state-run affair through Temasek-owned companies) and who should have the predominant voice in how their wages are taxed and CPF savings used.
Under the present autocratic system, however, the people have little say in how their lives are run. Decisions on financial matters, especially regarding taxes, fees and CPF savings, are dictated by the elite few in the PAP.
With this alternative policy on the cost of living, the SDP aims to change such a political arrangement and return the power to the people and, in the process, make living in this country more affordable and less stressful – in other words, a better life for all.
You can read the full policy A Better Life For All: Keeping The Cost Of Living In Singapore Affordable here.