The Goods and Services Tax (GST) will go up to 7 per
cent to pay for more government spending to help the lower income.
Mapping
out his government’s plan for the next five years and beyond, Prime
Minister Lee Hsien Loong yesterday pledged to “tilt the balance” of
public spending in favour of lower-income Singaporeans who are not
benefiting as much as other groups from economics growth.
My
social measures include more help in education, housing and health
care and more regular Work-fare bonuses – a shift from a once-off
measure – for the lower income workers.
To foot
the bigger bills, Mr Lee announced two new measures to raise
government revenue.
The
first is the GST hike, the details and implementation date of which
will be revealed in the Budget, on Feb 15 next year.
The
second is a plan to spend more of the returns from investing the
nation’s reserves. Right now, the Government can only spend half of
each returns, or “net investment income”, defined to include dividends
and interest. The definition will be broadened to include realized
capital gains. The move is significant, requiring an amendment to the
Constitution and “working out” details with the Elected President.
With
this speech to the new parliament and rounding up the debate on the
President’s Address, Mr Lee sketched out how globalization had changed
the environment for workers and broaden the gap between incomes at the
top and bottom.
“It’s
essential for us to tilt the balance in favour of lower income
Singaporeans because globalization is going to strain our social
compact. That’s why we are doing all this,” he said
“But I
would like to caution members that we should proceed with care…it is a
real slippery slope. And many, many social welfare schemes which have
ended up in serious trouble have started off with good intentions”
Mr Lee
made a firm pledge that the Government would put in place a
comprehensive package to fully offset the impact of the GST hike. It
would be weighted in favour of the middle and lower income and the
elderly needy.
“It’s
not just a GST increase, it’s a package which will fully offset the
impact of the GST of these groups and begin to strengthen the social
safety nets and tilt balance in favour of the lower income
Singaporeans,” he said.
As for the timing, Mr Lee said: “I think it’s better to
do this now when the economy is doing will. Then we can manage the
adjustments, we have flexibility to adjust our programmes depending on
how things turn out.”
Extracted from
"The Straits Times" Tuesday 14 November 2006
Updated December 2006 |
