Minister K Shanmugam has said that the Government does not want younger Singaporeans to be saddled with tax burdens, even as it ensures that the elderly are taken care of and no one is left behind.
When I read the above, I could only chuckle and then sigh. I had juz posted my very mixed tots about Mohammad Charlie Jasni who is earning $850 a month, buying a $99,200 HDB 2-room flat, noting that after the $40,000 grant the HDB loan is $59,220. On a 30-year mortgage at the HDB Concessionary Loan rate of 2.6%, the monthly repayment is $237. Mohammad is only able to pay $83 a month because the mortgage was reduced to slightly more than $20,000 because he and his wife have used up their CPF monies of $40,000. If they default, they have lost serious money.
About 15 years ago, in 1997 or 1998, I had an interesting conversation with some expat couples in their early 30s at my club . What surprised them most about S’pore was the financial commitements that their S’porean contemporaries had: 20 to 25 year loans to buy public housing apartments, and 10–year car loans. They said that back home (Canada, OZ or the UK), they would never have dared to make such long-term financial commitements. But it was par for the course here. And they would have not needed to, I added. They agreed. Well, now HDB mortgages are an “affordble” 30 years.
Of course, the PAP doesn’t want to burden the young with more taxes. The young can’t afford to pay higher taxes: they are juz managing a decent, comfortable life after meeting the interest and principal payments on their 25 to 30-year HDB mortgages. More will vote Opposition if taxes are increased. And I don’t mean the bluish near-clones of the men in white. They will vote for the people in red. Or they will riot.
The minister also said, “[W]e also have to send another message, which is that, only about 50 per cent of Singaporeans pay taxes”. This surely is wrong? If only 50% of S’poreans pay taxes, then why is the government giving a permanent rebate for the poor so that GST becomes a lot less regressive*?
We all (rich, poor and so-so) pay GST. That is why economists consider this tax to be the most efficient and effective way of taxing people. Tax is paid when one consumes. We all consume.
(It also has the added advantage of taxing consumption, not savings or investments. In traditional economics savings and investments are good, consumption is bad. Bit like how the PAP thinks? Investing in a 30-year mortgage is good, but spending more on consumables is bad.)
What he means by “taxes” is “income tax”. The minister when he was in legal practice was one of the top litigation lawyers around. He was very, very good. Err I hope that now he is a minister he doesn’t join the likes of PritamS, Vikram Nair and Hri Kumar Nair. Their use of words reminds me of::
“I don’t know what you mean by ‘glory,’ ” Alice said.
Humpty Dumpty smiled contemptuously. “Of course you don’t—till I tell you. I meant ‘there’s a nice knock-down argument for you!’ ”
“But ‘glory’ doesn’t mean ‘a nice knock-down argument’,” Alice objected.
“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”
“The question is,” said Humpty Dumpty, “which is to be master
Alice was too much puzzled to say anything, so after a minute Humpty Dumpty began again. “They’ve a temper, some of them—particularly verbs, they’re the proudest—adjectives you can do anything with, but not verbs—however, I can manage the whole lot! Impenetrability! That’s what I say!”
(Lewis Carroll’s Through the Looking-Glass, and What Alice Found There )
*But TOC’s Uncle Leong has described the problem with the government’s “solution”, “A new GST voucher will be given to help particularly lower-income and elderly Singaporeans, comprising three components – cash, Medisave top-up and U-Save.
‘So, you pay for your GST increase in cash, but you get the bulk of it back not in cash, but as Medisave top-ups which you can only use for medical purposes, and U-Save which helps you to pay for what has historically been generally increasing utility bills.”
A wicked, mean tot. Could one of the reasons for putting the money into CPF accounts rather than pay cash be to lessen the cost to the government? The real value of the cash in the CPF accounts are steadily and steathily eroded by inflation. With the Medisave account paying 4%, and the ordinary account 2.5%, and inflation at juz below 5%, could the government be hoping that inflation reduces its headline cost by the time the money is withdrawn? Even if inflation returns to the 2% range, the real cost to the government is reduced. As I said, a wicked, mean tot that would never occur to a PAP supporter or a journalist in our constructive, nation-building local media.