By Centre for Research on Islamic and Malay Affairs
The national Budget speech is an annual address crammed with numbers and financial jargon that can be confusing, making it difficult to be excited about; of course, with the exception of the announcement on cash payouts. However, regardless of its appeal, the Budget affects us and our finances. Thus, we need to make sense of it as it is our right and duty as taxpayers, voters, and citizens to know how our money is being spent. Moreover, a well-planned Budget is essential for any government to maintain good governance and stability by finding the right balance between resource allocation and economic growth. Over the past two years, the Budgets have allowed Singapore to increase employment for its population further and reduce the loss of potential economic outcomes to cushion the impact of COVID-19. As Singapore is shifting to an endemic COVID-19, Finance Minister Lawrence Wong recently announced the $109 billion Budget that offers a way forward towards collective recovery and strengthening the confidence of Singaporeans to help mitigate challenges and embrace changes amid an uncertain future. This article will provide an overview of some of the introduced policies and highlight other areas that the Budget could have provided more depth if we returned to a new normal.
IS THE GST INCREASE FAIR?
At present, we are paying a 7 percent Goods and Services Tax (GST) on almost everything that we purchase in Singapore. However, the Budget revealed that this tax would be gradually raised in two steps. The first increase to 8 percent will be in January 2023, and the second increase to 9 percent at the start of 2024. This move comes as Singapore faces rising inflation and to cover growing recurring expenditure due to the pandemic and state of the economy. Although the timing of the tax hike is concerning, Singapore’s GDP is predicted to grow from 3 to 5 percent in 2022. Furthermore, the timing of the hike is anticipated considering that it was first announced during the 2018 Budget and was bound to happen between 2022 and 2025. The Minister assured that the revenue from the GST hike would be directed towards supporting Singapore’s burgeoning healthcare system amid the rapid ageing of the population. Additionally, the impact caused by the pandemic indicates that Singapore needs to find more fiscally sustainable ways to fund its social, environmental and healthcare necessities. Interestingly even with the increase, Singapore’s GST rate remains amongst the lowest both in the region and globally. Undoubtedly, the lower-income would be the hardest hit because of this increase, but $640 million of the government’s payouts will be added to help cushion the impact for the next few years. However, even before the hike, consumers are already burdened by the high cost of living and whether the increase is parallel to the increase in wages, making it difficult to catch up with inflation. It also remains to be seen the extent to which the payouts will help low-income families. Although it undeniably lightens the financial burden of these families, no offset package would last forever. A household budgets study conducted in 2021 reveals that the impact of GST vouchers for a basic standard of living appears to be limited.
NARROWING THE WEALTH DISPARITY
An interesting change that the Minister announced is the increase of personal income tax rates for high-net-worth individuals. Those with chargeable annual income exceeding $500,000 (up to $1 million) will be taxed at a rate of 23 percent, while individuals with chargeable annual income in excess of $1 million will be taxed at a rate of 24 percent. It is reported that these changes will affect only the top 1.2 percent of taxpayers and will help to generate an estimated $170 million of additional tax revenue annually. These changes are anticipated to help narrow the widening wealth inequality and boost a sense of solidarity.
Nonetheless, one of the problems with taxing the top earners is implementation as the super-rich, like many, can be frugal when it comes to taxes and would find ways to decrease the amount of taxes they have to pay. However, unlike many, they are globally mobile and have access to instruments and resources, making it difficult for a single jurisdiction to tax them. Moreover, a high tax rate can be counterintuitive as Singapore is widely regarded as a tax haven for the super-rich. As mentioned by the Minister, a punitive tax rate would “inevitably cause money to flow away from Singapore”. To overcome this concern, perhaps we can take heart in the fact that it is not entirely about the low tax that appeals to the super-rich. Singapore is one of the safest countries globally, with excellent facilities and environment that would make them willing to pay a higher amount of taxes at a comparatively reasonable rate.
The big question, though, is how effectively the rise in personal income tax could help to narrow the wealth gap. Ultimately, collections from this increase should also be channelled towards redistributive measures. Taxing the rich should not be the only means to narrow the disparity. There needs to be the collective will by the privileged to uplift those on the margins of society without the need for state interventions. Unfortunately, morality is outsourced to the market to define what is good in a neoliberal economy, and it has atomised the ‘we’ into the ‘I’. This ‘I’ has developed into a truism and is responsible for the decline of community and the rise of self-centeredness. As the late psychotherapist Victor Frankl aptly pointed out, ‘being human is always directed, and pointing, to something or someone other than oneself: to a meaning to fulfil or another human being to encounter, a cause to serve or a person to love.’
SHIFTING TOWARDS A SUSTAINABLE SINGAPORE
The Budget also revealed the government’s plans to match Singapore’s climate aspirations to international standards by building a green economy. In order to achieve the net-zero emissions target, Singapore’s carbon tax will be gradually increased to reach $50 to $80 per tonne of emissions by 2030. Mr Wong added that this increase would push businesses and individuals to internalise carbon costs and take actions to moderate their emissions. A large portion of the national revenue will support decarbonisation efforts through investments into new low-carbon and more energy-efficient solutions. Additionally, the increase in carbon tax would result in an average four-room HDB household paying an additional $4 a month for their utility bill. Mr Wong assured that the government would provide support in the form of additional U-Save rebates to cushion the impact. Other than the decarbonisation efforts, the green economy will create new jobs in the sector, and the demand for talent with green skills will increase. In a recent Budget forum, Mr Wong maintained that the government will help everyone pick up new green skills to excel in the green economy and help individuals pivot from carbon-intensive sectors to green jobs through programmes under SkillsFuture. At present, more than 450 roles across 17 sectors require green skills, such as managing sustainability efforts and frameworks for environmental management. The sectors include manufacturing, trade and connectivity, financial services, hospitality and the built environment. That being said, any alternative ecologically-minded solutions and methods must challenge the deadly confluence of capitalism and consumerism that has made sustainable development a reality for the rich but remains an unfulfilled dream for the poor and marginalised. Thus, public education on sustainability must portray the interconnectedness between humans and the natural world that requires one to see the world as a tapestry of cause and effect. For a multi-religious country like Singapore, religion and its concomitants can play an essential role in creating a countervailing voice against greenwashing and ensuring that sustainable efforts ultimately promote the common good of humankind and the environment.
AREAS OF CONCERN
Public Outreach Campaigns
While the Budget has introduced new measures to strengthen the social compact and outlined a vision of a post-pandemic Singapore, only two-fifths of Singaporeans have a favourable view of the proposed GST increase, particularly among the middle-income households compared to members of other social strata. Additionally, more than half of Singaporeans believed that the GST offset package would not be sufficient to cushion the impact of the increased GST. In view of this, the government should not lose sight of the fact that outreach is crucial in making people understand the reasons behind the increase. Perhaps a certain amount of the Budget should be allocated for developing outreach programmes involving a network of collaboration between government agencies, unions, voluntary welfare organisations and the startup community. The outreach initiative should first explain the drivers that necessitate a higher GST through a language accessible to all. In other words, it has to present complex information effectively and transparently to the public to make them understand that it is not about pinching their pockets. It can highlight that Singapore is one of the few countries that complements GST with a scheme that offsets tax and how it compares with other countries globally.
Reclaiming the Creative Industry
The creative industry is among the most disrupted by the pandemic. Artists often rely on project-based or fixed-term contracts, and the COVID-19 restrictions have left many with little or no income. While the Minister has announced that Budget 2022 will provide more support for the arts sector, it was not clear how the support would uplift the plight of workers in the industry. The disproportionate attention to the arts sector could be due to the underlying assumption that the STEM industries play a vital role in the economy’s sustained growth. While it may seem like a good idea to heavily invest in science and technology for a sustainable post-COVID reality, it would be deeply misguided to do so at the expense of the arts. Apart from crippling the global economy, the pandemic has taught us all the value of human interaction. Science has given us the vaccine, but the connection with other people makes our lives worth living. Art is an emotional and creative medium that is often driven by the need for close interpersonal interactions and, in many instances, to effect positive social change. A recent report published by researchers from the University College London revealed that participation and engagement with the arts and other creative pursuits have a powerful impact on both mental and physical health. Ironically, the pandemic has taken a significant psychological toll on professionals within the industry mainly because of the continual fluctuation of safety measures that have prevented them from performing. Realising this predicament, Member of Parliament (MP) Ms Nadia Samdin has appealed for the government to provide clarity and introduce balanced measures that would enable creative spaces to operate and artists to earn a living by doing what they love best.
Part of the blueprint for a more inclusive Singapore is to prepare persons with disabilities (PWD) for the future economy. In light of this, the Minister announced measures to support PWDs in areas like employment, lifelong learning, and respite care. These measures are part of the Enabling Masterplan 2030 that will be launched by the end of this year. The Masterplan essentially aims to better integrate PWDs into society. While much progress has been made in creating greater awareness of PWDs, more can be done to cultivate a genuinely inclusive society.
First, resources from the government should aim to reduce the physical and emotional distress among Special Education (SPED) teachers. This can be done by addressing the high teacher-child ratio and lack of additional human resources to support teachers in managing the class. A high ratio raises the concerns of whether children with special needs are truly receiving a quality education. Moreover, according to a survey which was commissioned by Lien Foundation in 2018, at least 51 percent of professionals who are working in the sector identified burnout as one of the critical problems they faced.
Second, the salaries of SPED teachers should be on par and competitive with other professional sectors and commensurate with their workload. Teachers need to be remunerated well to see SPED as a meaningful career, which would help resolve the high attrition rate in the sector . It is essential for the voices of SPED teachers to be heard and invigorated to promote their well-being.
Third, more focus should be placed on supporting ground-up movements and spaces not just to raise awareness but to rally struggling caregivers who were severely affected by the COVID-19 pandemic during periods when they were cut off from school and support services. The unfortunate deaths of two 11-year-old boys in January this year shows that caring for children with special needs is highly stressful, and it is crucial for caregivers to look after their well-being.
One good example is the formation of CaringSG, a caregiver-led initiative for special needs caregivers. The group aims to strengthen the support for caregivers by connecting them to other caregivers, professionals and public stakeholders who will provide support. When the government, schools and civil society are aligned in their vision of inclusion, more effective changes and support can be provided to ensure that we live in a society that does not outsource inclusion to be defined by the market. Instead, our ideals of inclusion should be anchored in human dignity and flourishing.
As we are adjusting to living in a post-COVID reality, perhaps we should reflect on the clarion call of the brilliant Indian author Arundhati Roy to see the pandemic as a portal between two worlds as we chart our new way forward together:
“We can choose to walk through it, dragging the carcasses of our prejudice and hatred, our avarice, our data banks, and dead ideas, our dead rivers, and smoky skies behind us. Or we can walk through lightly, with little luggage, ready to imagine another world. And ready to fight for it”.
1 Lim, J., and Meah, N. The Big Read: Singapore households, businesses not spared from global inflation storm as GST increase looms. Channel NewsAsia. 2022, January 10. Retrieved from: https://www.channelnewsasia.com/singapore/gst-increase-price-hike-households-businesses-inflation-living-costs-2422671
2 Ng, K. H., et. al. What people need in Singapore: A household budgets study. 2021. p. 65. Available at: https://whatsenoughsg.files.wordpress.com/2021/10/2021-what-people-need-in-singapore-final-report.pdf
3 Tang, S. K. Budget 2022: Higher taxes for top-tier earners, high-end properties and luxury cars. Channel NewsAsia. 2022, February 18. Retrieved from: https://www.channelnewsasia.com/singapore/budget-2022-higher-personal-income-tax-property-tax-luxury-cars-2506711
4 Tan, W. Singapore wants to impose net wealth taxes, but it’s ‘very easy’ for money to move away, says its finance minister. CNBC. 2022, February 21. Retrieved from: https://www.cnbc.com/2022/02/21/singapore-finance-minister-lawrence-wong-on-wealth-taxes.html
5 Ng, J. S. The Big Read: As global clamour grows again to tax the rich more, Singapore weighs up the pros and cons. Channel NewsAsia. 2021, November 29. Retrieved from: https://www.channelnewsasia.com/singapore/big-read-wealth-tax-economy-covid-19-pandemic-2342236
6 Frankl, V. Man’s Search for Meaning. Beacon Press: Boston. 2000. p. 116
7 Choo, D. Skills in digital, green and care sectors expected to be in demand: SkillsFuture report. TODAY. 2021, December 8. Retrieved from: https://www.todayonline.com/singapore/skills-digital-green-and-care-sectors-expected-be-demand-skillsfuture-report-1765451
8 Blackbox Research Team. First Reactions to Budget 2022: Singaporeans unfavourable towards GST hike but supportive of tax rises for the wealthy. Blackbox Corp. 2022, February 2. Retrieved from: https://blackbox.com.sg/everyone/first-reactions-to-budget-2022-singaporeans-unfavourable-towards-gst-hike-but-supportive-of-tax-rises-for-the-wealthy
9 Raja, A. Call to Heal: Mental Health in the Arts – The Psychological Toll of the Pandemic. The Esplanade Co Ltd. 2021, July 30. Retrieved from: https://www.esplanade.com/offstage/arts/call-to-heal
10 Fancourt, D., & and Finn, S. What is the evidence on the role of the arts in improving health and well-being? A scoping review. World Health Organization. 2019. Retrieved from: https://apps.who.int/iris/bitstream/handle/10665/329834/9789289054553-eng.pdf
11 Samdin, N [@samdingoingon] Budget 2022 Speech Highlights: On Bringing Live Music Back to F&B Venues. Instagram. 2022, March 2. Retrieved from: https://www.instagram.com/p/Cal5ylavK8F
12 Ministry of Finance. Budget 2022: Charting Our New Way Forward Together. 2022, February 18. Retrieved from: https://www.mof.gov.sg/news-publications/press-releases/budget-2022-charting-our-new-way-forward-together
13 Goh, S. C. F., and Tan, S. Y. Moving Towards Greater Inclusion in Singapore’s Preschools: The Enablers, Possibilities and Barriers. Polish Journal of Educational Studies, 73(1), 2021. pp. 83-98. Available at: https://doi.org/10.2478/poljes-2021-0006
14 Ram, G. S. Opinion – Special education teachers must be given enough support. The Straits Times. 2018, May 11. Retrieved from: https://www.straitstimes.com/forum/letters-on-the-web/special-education-teachers-must-be-given-enough-support
15 Lien Foundation. Turning Challenges to Opportunities: A Study on Early Intervention Professionals and their Attitudes on Inclusion. 2018, April 24. Retrieved from: https://www.lienfoundation.org/uploads/Early%20Childhood%20Development/Early%20Intervention%20Survey%202018/Early%20Intervention%20Survey%202018.pdf
16 CaringSG. CaringSG – For special needs caregivers and the community. Accessed on 2022, March 11 at: https://caring.sg/
17 Roy, A. ‘The pandemic is a portal.’ The Financial Times. 2020, April 4. Retrieved from: https://www.ft.com/content/10d8f5e8-74eb-11ea-95fe-fcd274e920ca
The Centre for Research on Islamic and Malay Affairs (RIMA), a research subsidiary of AMP Singapore, has developed a range of programmes in research and established several platforms for the meeting of minds. RIMA conducts research in a number of key areas, which includes economics, education, religion, family, social integration, leadership and civil society.
This commentary was also published in The Karyawan, April 2022, Volume 17, Issue 2.
Photo Source: The Karyawan