The Workers’ Party (WP) will object to the Singapore Government’s 2022 Budget as it disagrees with the plan to hike the goods and services tax (GST), said Leader of the Opposition Pritam Singh on Monday (Feb 28).
This is despite the party backing the Budget’s direction to renew and strengthen Singapore’s social compact towards a fairer, more sustainable and more inclusive society, which Mr Singh, who is WP chief, described in Parliament as “a philosophy that comes with much promise for the future”.
Kicking off about two weeks of debate on the Budget statement for the new financial year starting on April 1, Mr Singh outlined the WP’s alternative proposals for raising revenue and better supporting businesses and low-wage workers, while calling for more transparency on both previous and newly announced Budget initiatives.
In this year’s Budget statement delivered on Feb 18, Finance Minister Lawrence Wong announced that the GST rise – to fund the recurring needs of a rapidly ageing population – would be staggered over two steps, from the current 7 per cent to 8 per cent from January next year and 9 per cent in 2024.
The WP believes this increase, first announced in 2018, to be unnecessary.
“The GST is a regressive tax that hits lower-income earners harder and this fact has been recognised since the GST was introduced in the early 90s,” said Mr Singh, pointing out that the hike, while anticipated, comes at a difficult time.
“Inflation is on the upswing, and prices are high. Supply chain disruptions are having an outsized impact on people’s purses. There’s real concern on the ground that the announcement to raise the GST will lead to price rises across the board,” he added.
“In fact, some price rises have already occurred with speculation that these were in anticipation of a GST hike.”
The WP has previously raised in Parliament other suggested tax measures, such as Associate Professor Jamus Lim’s (Sengkang GRC) proposal in November last year to impose a levy of 0.5 per cent to 2 per cent on the wealthiest in Singapore.
“(We) believe that the judicious use of progressive tax measures can achieve wider societal goals in Singapore,” said Mr Singh.
This year’s Budget contained a slew of moves to increase taxes on the personal income, property and luxury vehicles of high earners.
But Mr Singh said there would be a “limited impact” of such measures, which he said have been “characterised as a tax on wealth”, and called for the proactive exploration of outright wealth taxes.
Minister in the Prime Minister’s Office and Second Minister for Finance Indranee Rajah said last Tuesday that the Government was committed to progressive taxes and transfers structures, and that the measures rolled out in this year’s Budget were not “the be all and the end all of it”.
Mr Singh added that a distinction needed to be made between different types of wealth taxes.
“We should recognise the legitimate accumulation of wealth through effort and tangible business activity, especially that which creates jobs for Singaporeans. Even as there remains scope for wealth taxes, the values of entrepreneurship and equitable reward for hard work can nonetheless be recognised and even promoted through tax rebates or relief for such individuals,” he explained.
“However, wealth accumulated through capital appreciation should be dealt with differently and taxed accordingly in the name of a fairer and more inclusive society.”
Mr Singh also reiterated suggestions on raising revenue made by the WP since as far back as in 2018, such as by including a portion of land sales into recurrent revenue, and adjusting the Net Investment Returns Contribution (NIRC) framework to allow for recurrent spending to be raised to 60 per cent from the current 50 per cent.
The NIRC is the largest single source of government revenue. Under its framework, the Government can spend up to half of the long-term expected investment returns generated by Temasek, sovereign wealth fund GIC and the Monetary Authority of Singapore – the three entities tasked to invest Singapore’s reserves.
“Our healthcare needs will likely be on an upward trajectory. For the very Singaporeans whose energies contributed to the reserves… spending for them in their golden years and at their time of need should not even be a question,” said Mr Singh.
Notwithstanding the WP’s disagreement with the GST hike, the party secretary-general said he welcomed the formation of a Committee Against Profiteering to address concerns that businesses could use GST as a cover to raise prices.
Committee chair and Minister of State Low Yen Ling had invited Mr Singh to nominate an opposition member to sit on the panel, and the Progress Singapore Party’s Non-Constituency MP Hazel Poa has taken up the role, Mr Singh revealed.
In his half-hour speech to open an annual marathon debate, he suggested that new Budget measures such as the Small Business Recovery Grant – for those hardest hit by Covid-19 – be expanded to also consider, on a more flexible and case-by-case basis, appeals from businesses that fall outside the eligibility criteria.
Mr Singh also urged the Government to move more decisively on the new Progressive Wage Credit Scheme, under which employers who raise the pay of their local lower-wage workers over the next five years will receive co-funding.
The Government will co-fund 50 per cent of pay increases made this year and next year, 30 per cent of pay increases in 2024 and 2025, and finally, 15 per cent of pay increases in 2026.
Mr Singh called on Mr Wong to ensure that Singaporean workers who take home less than $1,300 can rely on the scheme to raise their wages immediately, “as they already earn very low salaries”.
He then proposed that the Government remove the newly announced criterion for workers to earn at least $500 a month to qualify for the Workfare Income Supplement scheme – which tops up their incomes and Central Provident Fund (CPF) savings.
While designed to encourage part-timers and casual workers to take up regular, full-time work, this will penalise those with legitimate reasons for not doing so – and they are often the most financially vulnerable workers, said Mr Singh.
He also made a series of calls for the Government to reveal more data and details – including in its revenue and expenditure projections for the rest of the decade; how it intends to refine the assessment of employment pass applications; and the revenue quantum the increased carbon tax is projected to bring in up to 2030, among others.
On a larger level, the Government should “review how it reports on initiatives that were previously announced and whether they met their goals”, said Mr Singh.
“The new social compact ought to require a report card that goes into far greater detail than the bi-yearly Singapore Public Sector Outcomes Review,” he added, pointing to Singapore’s Industry Transformation Maps and its Research, Innovation and Enterprise 2025 plan as examples where more precise information should be made accessible.
“The outcomes of such initiatives should be a major feature of the new post-pandemic social compact that the Budget seeks to renew between citizens and the Government,” said Mr Singh.