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For the longest time, the PAP has accused the opposition of not coming up with alternative ideas to take Singapore forward. Then the SDP drew up a series of policy positions (see here) some of which the PAP has even adopted (see here).
Deprived of this platform of criticism, the ruling party’s refrain has morphed into “Where is the money going to come from?” or some variation of it. The implication is that these programmes are beyond Singapore’s financial means.
This new line of attack is, perhaps, best captured by Dr Vivian Balakrishnan who, in GE 2015, expressed that SDP’s tax-and-spend approach will take Singapore down the path of Greece. He was referring to Greece’s debt crisis following the global financial meltdown in 2008.
It is a bit rich for Dr Balakrishnan to accuse the SDP of heavy taxation and profligate spending given that it is his party that has been going on a spending spree (see below) and imposing a slew of tax increases, including the impending GST increase.
Nonetheless, we will address the matter of funding of the SDP’s programmes. Below are some sources and strategies.
I. Cut profligate and wasteful spending
1. Reduce ministerial pay. Judging by their recent collective performance (and this extends back to before the Covid-19 outbreak), the present set of ministers have been mediocre at best. Their salaries are not commensurate with their ability and should be appropriately pared down. If these salaries are reduced according to the SDP’s formula proposed in our policy Ethical Salaries for a Public-centred Government, the total savings from the entire cabinet is conservatively estimated at $10 million to $12 million a year (see here).
The savings provide 2,000 of our poorest elderly $500 of living expenses a month for a whole year. This would be a good start.
Also, by reducing their salaries, ministers will be able to lead with moral authority. This is crucial because boosting essential financial support for the people will entail trade-offs for the privileged class (see proposed measures below) and will require leadership by example from the ministers.
2. Stop self-promotion. Another area of public expenditure that needs to be cut back is the use of advertisement for MPs’ self-promotion. From banners to newsletters to LED-display boards, public funds are being spent unwisely to advertise PAP MPs and candidates.
3. Exercise financial prudence. From purchasing $2,000 bicycles for NParks officers to paying $800,000 for rubbish centres to over-spending $300 million on the Youth Olympic Games, the PAP has been profligate in spending the people’s money. The Auditor-General has repeatedly cited the various ministries for not exercising financial prudence when it comes to expenditure of public funds money.
4. Stop mega projects. The PAP also needs to stop dubious projects that eat up tax monies. The Jewel Changi, costing nearly $1.8 billion, is a case in point. The mall was proving to be a disappointing business venture and in danger of becoming a white elephant even before the start of the Coronavirus pandemic.
In the immediate future, the government is going to spend more on similar projects like the Founders’ Memorial and a questionable Terminal 5 at Changi Airport. It also recently announced that it would spend $60 billion in the coming 10 years to renew and expand the rail network. Part of this must be plans to cater for an even bigger population, possibly 10 million.
II. Stop a 10-million population
As mentioned above, the PAP has indicated that it is thinking of raising the population in Singapore to 10 million. Apart from the fact that this will make the already overcrowded island even more densely populated which adds to the mental stress of the people and reduces the overall quality of life (not to mention the quicker spread of virus outbreaks), increasing the number of people will mean greater expenditure in infrastructure like housing and public transport.
Cutting back on unnecessary government spending will free up funds for programmes like RESTART (Re-Employment Scheme and Temporary Assistance for the ReTrenched) and RISE (Retirement Income Scheme for the Elderly). Such programmes will put money in the pockets of Singaporeans which will help to revive and keep the economy running in the post-Covid era.
III. Increase taxes on the wealthy
1. Increase personal income tax. Presently, this tax for the wealthy is only 22%. (It was cut from 28% to 20% in 2007 and raised to 22% for income above $320,000 in 2017). This level is one of the lowest in the world. While the millionaires and billionaires continue to accumulate vast amounts of wealth, they are not doing their fair share to ensure that all Singaporeans benefit equitably from GDP growth.
The SDP recommends that personal incomes taxes for the highest 1% income-earners be raised to close to 30%. Even then, this rate is still the lowest among developed economies.
2. Introduce a wealth tax. This can also be done for the richest of the rich. Even PAP MPs have called for such a tax. The GST for luxury items can also be raised to 10% and beyond to raise revenue for SDP’s programmes like RESTART and RISE.
3. Increase corporate tax. MNCs and GLCs pay low corporate taxes at a flat 17% which is one of the lowest in the world. This can be increased to fund public programmes to enhance the wellbeing of the average Singaporean.
4. Reinstate estate duty. This tax was abolished in 2008 but should be re-introduced for wealthy families/individuals who own multimillion-dollar homes and wish to pass it on to their children as inheritance. This is important as the overwhelming majority of Singaporeans live in HDB flats that become zero in value at the end of their 99-year lease and cannot be passed on to their children.
5. Introduce capital gains tax. Such a tax would also help to provide revenue to ensure that essential public services are adequately funded.
IV. Use income from reserves
The government passed three budgets in 2020 to deal with the fallout from the pandemic:
These three budgets cost $60 billion. The revenue is derived from taxes, returns from reserves, and $17 billion (of the Resilience package) drawn from past reserves. (Note: A significant portion of the funds would go back to the government as some of the measures have been designated to help companies of which the government owns a good portion.)
By comparison, the SDP’s RISE, for example, is estimated to cost $2.8 billion annually. At this rate, it would take more than 20 years to expend the same amount of money the PAP allocated in 2020 alone.
The reserves have been accumulated through the extraction of wealth through the people’s CPF savings, HDB land lease, COE, ERP, foreign workers’ levy, etc. to, according to some estimates, upwards of a trillion dollars.
With an unprecedented economic fallout expected from Covid-19 crisis, it is time that the government stops penny pinching with Singaporeans and starts taking care of the people from whom it has taken so much.
As a first step, it must tell the people how much it has in our reserves before the country can make an intelligent assessment of how much to allocate to help the people live a secure and decent life. The PAP must not be allowed to be the sole arbiter of how much of the reserves ought to be used.
It must also not be allowed to do this in opacity and non-accountability. It cannot say that opposition-proposed programmes would bankrupt the nation while drawing billions from the reserves – all while refusing to disclose the amount.
The Covid pandemic has irrevocably altered the global socio-economic landscape. Singapore cannot escape this changed reality. No longer can the PAP continue to play the game by telling Singaporeans that it cannot afford to take care of the vulnerable and the weak, which include workers and retirees, while financially molly-coddling the wealthy.
If Temasek Holdings (owned by the Ministry of Finance) can underwrite a $15-billion sale of shares and convertible bonds for Singapore Airlines alone, the government can invest in Singaporeans.
If the government can use public funds to subsidise companies’ staff wages through the Jobs Support Scheme (JSS) – in which 32 companies returned the payouts worth a combined $35 million (as of May 9) – it can deploy funds to help vulnerable sectors of society to tide through this period.
And if it can use taxpayers’ money to pay for added costs incurred by private dorm operators due to the dormitory lockdowns, it can use the money to reduce wealth inequality in this country.
The SDP’s programmes like RESTART, RISE, healthcare plan and housing policy focus on putting the welfare and wellbeing of the people first. We need to look after our people – average Singaporeans whose hard work and sacrifice built this country into what it is today – and put them in the centre in our policy-making.