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Tag: high-income

  • Budget 2017: Price Hikes Affect Poor More Than Rich

    Budget 2017: Price Hikes Affect Poor More Than Rich

    Water is a vital resource and a basic human right. Yet, the Government of Singapore sees it fit to use utilitarian or volume based pricing model for the provision of water.

    Such a model affects both the rich and poor and some say, the poor are more adversely affected than the rich.

    A 30% price hike will be a stretch for the poorer families while the rich has the means the ride the price hike.

    If it was the intention of the government to elicit any kind if behavioural change in the consumption of water, we’ll probably see the poor conserve a lot more.

    One spokesperson from IPS said that the 30% price hike is to create awareness. It’s a poor choice of words even for a PAP apologist on the IPS payroll. What’s he smoking?

    Call a spade a spade a price hike is not a water conservation campaign or an awareness programme.

    In an article written by Leong Hze Hian, he said that the water price in Hong Kong is priced 14 times lower. Perhaps they have better technology but whatever the reasons are, it’s definitely merits a discussion in parliament.

    The budget seems to benefit the middle class more than the underclass. The 20% tax relief capped at S$500 benefits the middle class for sure.

    Perhaps a tax on manual car wash and a closer watch on how water is used is F&B outlets when dishes are washed is much needed.

    With the advancement in smart metering technologies, it is possible to have different pricing structures for industrial versus residential users by districts, flat-types and household income.

    A different pricing structure definitely adds complexity to the pricing regime but it will definitely have the intended effect of changes in consumption patterns.

     

    Source: www.theindependent.sg

  • Rich People Problems – Just Because They Stay In Private Properties Doesn’t Mean They Are Rich

    Rich People Problems – Just Because They Stay In Private Properties Doesn’t Mean They Are Rich

    Call it the power of mrbrown: The popular blogger’s tweet about a private property owner’s gripe is circulating online, provoking indignation and endless mockery.

    In a profile of Prime Minister Lee Hsien Loong’s Ang Mo Kio GRC by The Straits Times, father of three Chew B.W. was one of the constituents interviewed. His complaint: Not enough is being done for those living in private estates.

    Mr Chew noted the rising cost of living, such as the cost of a year’s tuition at The Learning Lab ($4,000) and a fencing costume for one of his children ($600). He added: “It doesn’t mean we are rich just because we live here. The Government should also help people like us – we pay the most taxes.”

    According to the Manpower Ministry’s website, the median gross monthly income in June 2014 was $3,770. The cost of a semi-detached house typically runs into seven figures.

    Mr Chew’s sentiments got short shrift from netizens on social media. The tweet has been retweeted almost 570 times. Here are some of the choicer comments on Twitter:

     
    Over on Facebook, user Callan Tham said: “Here, let me play the world’s smallest violin for them.” Kwan Tuck Soon also remarked: “The gahmen should help them upgrade to a mansion with a fencing room.”

    But it was Reddit user xavierkoh who had perhaps the most reasoned response: “Perhaps what we really need to cultivate as a community is a sense of empathy for the less privileged instead of always focusing on our own problems which might be more trivial in nature as compared to others. Without that, our society will further fragment into distinct social classes who only care about themselves.”

     

    Source: https://sg.news.yahoo.com

  • MPs Question Fiscal Sustainability Of Budget Schemes

    MPs Question Fiscal Sustainability Of Budget Schemes

    About a week after the Republic unveiled a Budget that was hailed by various quarters for its generosity and far-sightedness, several Members of Parliament (MPs) yesterday raised concerns about the Government’s fiscal sustainability, given that the projected spike in social spending coincides with a moderating economy.

    An ageing population would also mean less revenue that could be derived from taxes, they added, stressing that the Republic’s healthy reserves should not be taken for granted.

    In all, 25 MPs rose to speak during the first day of the Budget debate. Apart from concerns about fiscal sustainability, MPs generally welcomed Budget measures such as the SkillsFuture initiatives and the Silver Support Scheme, and offered suggestions on the implementation of the new programmes. They also highlighted the continuing struggle among businesses to raise productivity, but stressed the need to stay the course.

    The introduction of more social safety nets and other measures to mitigate social inequality prompted Workers’ Party chairman Sylvia Lim to observe a “leftwards” shift.

    In particular, she said the Silver Support Scheme — which gives cash payouts to needy elderly — came as a surprise to most. “It embodies what the People’s Action Party government has always eschewed — having any form of rights-based, ‘defined benefits’ welfare scheme,” Ms Lim said. “Up to now, government assistance schemes were usually temporary and subject to continuous means-testing and conditions, with applicants needing to fill up forms and provide documentary proof of illness and family income.”

    She added: “This Budget explicitly talks about strengthening social safety nets. This suggests a shift to the left, a direction which I believe is right … A shift left does not necessarily undermine economic performance, but could well enhance it.”

    Holland-Bukit Timah GRC MP Liang Eng Hwa said the Budget signalled a further shift to the left, but this was possible only because “over the past 50 years, we have built a stronger and more sustainable financial position through careful budgeting and sheer discipline”.

    Still, Nominated MP (NMP) Chia Yong Yong urged prudence, quipping: “If we lean too much to the left, we will not have much left.”

    Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam announced during the Budget statement last Monday that Temasek Holdings will be included in the Net Investment Returns (NIR) framework — joining GIC and the Monetary Authority of Singapore — so part of its projected long-term returns can be spent. Personal income taxes for the top 5 per cent income earners will also be raised. With these moves, the MPs felt the Republic has seemingly exhausted ways to boost its coffers, without raising taxes for the masses.

    West Coast GRC MP Foo Mee Har noted that this year’s budgeted expenditure was 19 per cent higher than that in the previous year.

    “While it is assuring to know that these expenditures can be provided for from current reserves accumulated since 2011, it appears that we have come to rely more and more on past reserves to fund our spending, and have now resorted to including Temasek in the NIR framework to make ends meet,” she said. “How will we know when we have gone too far, when we have crossed the line in fiscal prudence — that tried-and-tested principle that has seen Singapore through many economic crises?”

    Distributing a table showing figures from the Ministry of Finance, Bishan-Toa Payoh GRC MP Hri Kumar Nair pointed out that if Singapore had not been drawing from its reserves via net investment income contributions, it would have run up “large deficits for a number of years”.

    Noting that government expenditure will continue to rise, he warned: “We are running out of levers to pull. After Temasek, there is no next.”

    He added: “Increasing taxes on the top 5 or even 10 per cent will get you only so far, and there will be considerable pressure on the Government not to raise taxes for everyone else … There will no doubt be calls on the Government to raise the NIR contribution beyond 50 per cent, but that means leaving behind less for our children, so where do we go from there?”

    Mr Liang suggested that the Government regularly review the country’s fiscal sustainability, with additional scrutiny and oversight on spending programmes that last longer than 10 years.

    With the economy moderating, NMP Randolph Tan said, ultimately, the fiscal strength to fund more social programmes would have to come from strong economic growth. “Singapore has to be cautious and prepare for the possibility that — unlike resource-rich and larger economies —slower growth may not turn out to be the idyllic experience we imagine,” he said. “By simultaneously drawing on surpluses, proposing a deficit and announcing a surprise rise in taxes on the wealthiest, this Budget gives us a glimpse of the stark realities we face.”

    The Budget debate continues today.

     

    Source: www.todayonline.com

  • Singapore Budget 2015: 7 Reasons Why Robin Hood Budget Matters

    Singapore Budget 2015: 7 Reasons Why Robin Hood Budget Matters

    I tried frantically to keep up with noting down the giveaways as Finance Minister Tharman Shanmugaratnam reeled them off as he announced the Budget 2015.

    A new SkillsFuture Credit account for all Singaporean workers aged 25 and above. Top ups to the accounts of children, secondary school students and post-secondary school students. Higher GST vouchers across the board, with a special bonus for seniors.

    There were too many to list. I gave up and just listened.

    And minutes after Mr Tharman finished the Budget 2015 statement, the first SMS came, from a former colleague.

    A Robin Hood Budget, she said.

    Here are seven noteworthy things about this year’s Budget.

    1. Robin Hood qualities

    It takes from the very rich to give to those who are poorer. Without little fanfare but every determination, the Government raised the top marginal tax rate for personal income taxes from 20 to 22 per cent. It will raise $400 million in extra revenue when it kicks in the Year of Assesssment 2017.

    It gives a lot to the poor, especially seniors from lower-income jobs in the past, under a new Silver Support bonus that aims to give up to about $750 a quarter a person to the elderly.

    2. The 1 per cent gap

    Mr Tharman flagged this gap. No, I’m not talking about the much-touted gap between the top 1 per cent earners and the rest, which has gotten so much flak worldwide for fostering inequality.

    I’m talking about the 1 percentage point projected gap between long-term revenues and long-term spending. The latter is tipped to go up to 19 to 19.5 per cent of GDP from now, as Singapore opens its coffers to spend on health care, retirees, and on infrastructure and investment in education. The former hovers around 18 to 18.5 per cent of GDP.

    How to make up the shortfall of about 1 per cent of GDP?

    This is a structural issue that will have resonance beyond this Budget.

    3. New spending rule

    Mr Tharman has a way to close that 1 per cent gap: Use projected long-term returns from Temasek Holdings.

    The Net Investment Return formula framework was implemented in 2009. He said: “Under the framework, the Government is allowed to spend up to 50 per cent of the expected long term real returns on its net assets managed by MAS and GIC.”

    Temasek was left out as it was undergoing a major change in investment strategy. Mr Tharman said it was a good time to add Temsek to the mix.

    So this Budget is important for signalling the long-term gap in revenue and spending.

    It is also significant for using a new framework that allows Singapore to tap a wider pool of money from expected investment returns on its reserves into the future.

    “The move will bolster our fiscal resources at a time when we have to fund long-term critical infrastructure and develop the human talent and capabilities to secure our future.”

    4. More help for middle-income

    Actually, I should qualify the Robin Hood bit. This Budget takes from the rich, to give a lot more to the middle-income, not just the poor.

    A 50 per cent personal income tax rebate, capped at $1,000, will benefit mid-income earners most.

    The concessionary maid levy is halved to $60. Exam fees are waived for most school students. Child-care subsidies will be improved. Most parents with kids will get fairly large top-ups to the child’s education account, of about $500 per child, regardless of whether the child is in preschool, secondary school or tertiary education.

    5. New way of targeting subsidies

    A new method to figure out who gets more subsidies and government assistance will be introduced for the Silver Support bonus for retirees. It goes beyond the traditional use of housing type. The Silver Support will still use housing type as a proxy for wealth, giving those in smaller flat types more in the Silver Support bonus. But even those in larger flats, up to five-roomers, will get it.

    But it will also take into account past working income of the retiree. It will also look at their household income to gauge what level of support these retirees have.

    As the Silver Support kicks in only from the first quarter of 2016 – in just over a year’s time – it isn’t clear how this new system will work out.

    But it is a novel, and potentially very useful, way of targeting subsidies. It will also be automatic, using presumably income data from Iras and CPF, and household type data from HDB.

    With Singapore going well-down the path of more middle-class welfare subsidies, expect this to be the start of a more refined way of figuring out who deserves what grants and subsidies.

    6. Meritocracy of skills, not hierarchy of grades

    Mr Tharman and other government ministers have been saying for several years now that Singapore has to go beyond a system where people are valued for their academic credentials, to one where every worker is motivated to excel at what he or she does, and rewarded accordingly.

    This Budget puts substance to that dream, with a new SkillsFuture Credit account for every Singaporean aged 25 and above. The Government will give $500 into this account in 2016.

    There will be a concerted push to get Singaporean workers and employers to change our culture to one which values people for skills, not their paper qualifications.

    A range of new SkillsFuture Awards and Fellowships will be introduced. Think of these as the skills-equivalent of the Public Service Commission’s scholarships for academically bright students.

    7. Productivity 2.0

    The first round of measures yielded some good results.

    Mr Tharman said: “Productivity today is 13 per cent higher than at the start of our restructuring journey in 2009. This is an average growth rate of 2.5 per cent per year. All of this gain was achieved in 2010 (11.6 per cent) and 2011 (2.3 per cent) as we recovered from the recession, and growth has been negligible in the three years since then.”

    Next: consolidating measures to focus on innovation and internationalisation. More grants for innovation. Tax breaks for mergers and acquisitions go up to encourage companies to merge and consolidate. The National Research Fund gets a $1 billion boost.

    All in, it can be said to be a sensible yet generous Budget, albeit at the expense of the very high-income. It may disappoint those who wanted a big SG50 Bonus to celebrate the nation’s Jubilee. But it does give out a mass hongbao to all Singaporeans, via top-ups to education funds for children and students, and via the new $500 SkillsFuture Credit for workers.

    More importantly, it sets Singapore on a clear trajectory – Mr Tharman would call it the path of progressivity – but basically the writing’s on the wall: higher taxes on the rather rich, to give to the poor and the middle-income.

     

    Chua Mui Hoong, Opinion Editor

     

    Source: www.straitstimes.com

  • Singapore Budget 2015 – Winners And Losers

    Singapore Budget 2015 – Winners And Losers

    Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam delivered his speech on Budget 2015 on Monday, and there were few surprises.

    As expected, he talked about the Silver Support scheme for the low-income elderly, the enhancements to the Central Provident Fund System, handouts in the form of GST vouchers, and more help for SMEs.

    Perhaps the biggest surprise was the higher personal income tax rate for top earners.

    Here’s a round-up of the key announcements based on the “winners” and “losers”:

    Biggest loser: High-income earners

    Singapore’s top 5 percent, those who earn at least $160,000, will pay higher personal income tax.

    “I will raise the top marginal rate by two percentage points, from 20 per cent to 22 per cent, for the highest income earners, with a chargeable income above $320,000. I will also make smaller adjustments that will raise income tax for the others in the top 5 per cent,” he said.

    The higher tax rates will apply starting with income earned in 2016 and on taxes to be paid in 2017. It is expected to raise additional revenue of $400 million a year when it comes into effect.

    Loser: Businesses relying on Transition Support Package

    Tharman announced that the Wage Credit Scheme will be extended for 2016 and 2017, but level of co-funding will be reduced. He will also extend the CIT rebate for years of assessment 2016 and 2017 at the same rate of 30 per cent of tax payable but up to a lower cap of $20,000 per year of assessment. He will let the Productivity and Innovation Credit (PIC) Bonus expire.

    The three schemes make up the Transition Support Package, which is estimated to disburse $7.6 billion over three years.

    Loser: Car owners

    Tharman announced higher petrol duty rates effective the same day as his speech. The duty rates for premium grade petrol will be increased by $0.20 per litre and internmediate grade petrol by $0.15 per litre.

    Tharman noted that petrol duty rates have remained unchanged since 2003, and that with alling oil prices, pump prices after the petrol duty changes would remain lower than the level in the last two years.

    Winner: Middle-income households

    To help middle-income taxpayers, Tharman announced a personal income tax rebate of 50 per cent, setting the cap at $1,000. It will apply for year of assessment of 2015 (for income earner in 2014).

    1.5 million individuals are expected to benefit from the tax rebate, which will cost the government $717 million.

    Also, to support middle-income families, the foreign domestic worker concessionary levy will be reduced from $120 per month to $60 per month and extended to households with children aged below 16 from below 12.

    Winner: Lower-income households

    The quantum for the GST Voucher will be increased by $50 in cash across the board from 2015 onwards. It is expected to benefit 1.4 million Singaporeans.

    Winner: CPF members

    As proposed by the NTUC and CPF Advisory panel, the government will increase the CPF salary ceiling from $5,000 to $6,000. It is expected to benefit at least 544,000 CPF members.

    The contribution rates for workers aged 50 to 55 will be restored to the same level as those for younger workers. Thus, the contribution rates for these workers will go up by two percentage points in 2016 (1 percentage point each from employer and employee).

    For workers aged 55 to 60, the rate will go up by 1 percentage point from employers, and for workers aged 60 to 65, it will go up by 0.5 percentage points from employers.

    To make the CPF system more progressive, an additional 1 per cent extra interest will be paid on the first $30,000 of CPF balances from age of 55.  The change will take effect from the start of next year.

    Winner: Low-income elderly

    The Silver Support Scheme will be a new feature of Singapore’s social security system, said Tharman.

    “It is a permanent scheme for both today’s seniors and those in the future,” he said.

    Silver Support will be paid quarterly, similar to Workfare. It will provide a supplement of $300 to $750 every quarter for eligible seniors. The average recipient will get $600 per quarter. All the seniors who qualify will receive the supplements for life, as long as they remain eligible.

    The scheme is aimed to support the bottom 20 per cent of Singaporeans aged 65 and above. The assessment will be done automatically, so there will be no need for application. It is estimated to cost about $350 million in the first full year. The Ministry of Manpower is expected to implement it around the first quarter of 2016.

    Aside from the scheme, Tharman also said seniors aged 55 and above will get a GST seniors’ bonus in 2015 to help with their daily expenses. It will effectively double the GSTV cash component that they usually receive.

    Also, those aged 65 and above and living in HDB flats will get an additional $300 this year.

    Winner: Skills upgraders

    Tharman announced a SkillsFuture Credit in which each Singaporean 25 years old and above will receive an initial credit of $500 from 2016. Further top-ups will be made at regular intervals. The credits can be used for education and training.

    Education and training subsidies for all Singaporeans aged 40 and above will be enhanced to a minimum of 90 per cent of training costs for courses funded by the Ministry of Education and the Workforce Development Agency.

    The subsidies will be significant, Tharman pointed out. For example, for a part-time undergraduate course such as a Bachelor of Engineering, the total fees payable by a student will be reduced by 60 per cent, from about $17,000 to $6,800.

    Tharman also introduced the SkilsFuture Study Awards and the SkillsFuture Fellowships to develop deep skills and mastery in the growth clusters of the future, as well as the SkillsFuture Leadership Development initiative to encourage companies to groom Singaporeans in leadership roles.

    Winner: Families with children

    Tharman announced the introduction of a new partner operator (POP) scheme to complement the anchor operator scheme. Parents will benefit from lower fees than these centres currenly charged, Tharman said.

    He also said the government will top up the Child Development Accounts of every Singaporean child aged six and below in 2015. Those currently without CDAs can open accounts and receive the top-up. The majority of children will receive $600, he said.

    Also, fees for national examinations for Singaporean students in government-funded schools will be waived, saving families and students up to $900 from primary school to pre-university.

    Government will also provide a $150 top-up to the Edusave Accounts of Singaporeans students aged 7 to 16 on top of the annual contribution of up to $240. Students above the age of 16 who are still in secondary school will also get the top-up.

    Tharman also said the MOE Financial Assistance Scheme will be enhanced and a transport subsidy will cover at least half of students’ transport costs.

    Annual grants for school-based financial assistance will also be increased.

    Post-Secondary Education Account (PSEA) of Singaporeans aged 17 to 20 will also get a top-up. The majority will receive $500.

    Winner: SMEs, start-ups, businesses in expansion mode

    Tharman said he would top up the National Research Fund by $1 billion this year to encourage firms to invest in research and development.

    To reduce early-stage funding gaps for start-ups, the government will increase the co-investment cap for SPRING’s Startup Enterprise Development Scheme (SEEDS) and Business Angel Scheme.

    The government will also pilot a venture debt risk-sharing programme with selected financial institutions to provide high growth companies with an alternative to equity financing and traditional bank loans.

    It will also raise the support level for SMEs for all activities under IE Singapore’s grant schemes from 50 per cent to 70 per cent for three years. It is expected to benefit about 700 projects.

    For companies venturing overseas, Tharman said he will enhance the Double Tax Deduction for the Internationalisation scheme to cover salaries incurred for Singaporeans posted overseas.

    Tharman also introduced a new tax incentive, the International Growth Scheme (IGS), to provide support to meet the needs of larger Singaporean companies in their internationalization efforts. Qualifying companies will enjoy a 10 per cent concessionary tax rate on their incremental income from qualifying activities.

    The tax allowance for acquisitions costs will also be increased from 5 per cent to 25 per cent of the value of acquisition. Companies will also be able to claim M&A benefits for acquisitions resulting in at least 20 per cent shareholding in the target company, down from 50 per cent.

     

    Source: https://sg.finance.yahoo.com