Budget 2018 was served like a sugary-lemon cake on a plate. Sweet but sour
Straits Times Opinion Editor Chua Mui Hoong described Budget 2018 like sugar with a strong lacing of lemon.
Singaporeans will be receiving a big angbao from the Government at the end of the year to cushion the impending GST hike which will slowly but surely kick in at least 3 years from now.
Some may prefer to do without the SG bonus so they don’t feel that the Government is handing out goodies on one hand and collecting more money on the other hand.
A few felt that the $700 million worth of SG bonus should be distributed to those in need.
But is it a wise political move to announce a permanent upward adjustment in GST without sharing a proportion of this year’s Budget surplus with the citizens?
It’s akin to forcing people to eat a strong, fully-flavoured lemon cake with zero sugar in it. Well, not everyone can take it.
It’ll not completely remove the pain of a GST hike but it’ll cushion the impact.
Why raise GST when there is a $9.6 billion worth of surplus from last year?
Because GST contributes to a significant chunk of our Government’s revenue (16.2% in 2017) and it is a stable, recurring revenue that will help position Singapore into the next decade.
Budget surpluses are accumulated as current reserves for each term of government and accumulated current reserves will be transferred to Past Reserves at the end of each term of government.
So basically, Minister Heng is planning ahead for the next term of government because he foresees the expanding expenditure in healthcare, education, security and infrastructure in the near future.
Some people might ask question why there’s a need to raise GST when the Budget may run large surpluses over the next few years.
It’s not prudent to rely on revenue from stamp duties and extra fund from Monetary Authority of Singapore (MAS) to fund our expenditure.
Minister Heng Swee Keat explained that stamp duties and additional funds from MAS is not a structural surplus.
Meaning to say it’s not sustainable fiscal fiscal revenue.
“We do not expect either to occur every year. It is not a structural surplus. We cannot base our long-term fiscal planning on the basis of exceptional factors being positive, year after year.”
For example, when you go for a job interview, would you indicate your last drawn salary based on the average of your overall annual income or would you be more conservative and state your basic monthly salary?
If you do well at work, you can expect a higher performance bonus but this is still a bonus after all – it may or may not happen every year.
Similarly, with certainty that Singapore is facing an ageing population, can we depend on “bonus” to plan our healthcare needs?
Raising the GST to 9 per cent will add about $3 billion to the repository each year.
This will contribute to our healthcare expenditure which will require an additional $3.6 billion a year.
So yes, this Budget tastes like a sugary-lemon cake on a plate. Sweet but sour.