SG Budget 2022: A Fairer and More Resilient Society

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[1]. 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[2].

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[3]. 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”[4]. 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[5]. 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.’[6]

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[7]. 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[8]. 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[9]. 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[10]. 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[11].

Contesting Inclusion
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[12]. 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[13]. 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[14] [15]. 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[16]. 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.

CONCLUSION
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”.[17]


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.

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