A triple-A budget
It’s a good start to clear up the country’s pile of accumulated messes; please don’t stop there. By Seah Chiang Nee
Feb 2, 2013
(Synopsis: At long last, someone in power is doing something very right for Singaporeans like closing the economic gap.)
BUDGET times are not occasions when the thrifty government here would likely score a lot of brownie points among its citizens.
In fact, Singaporeans are often more worried about being made to pay more fees and levies than to be able to receive goodies.
However, Budget 2013 last week was a surprising exception. It has allowed the government to regain a little ground lost through unpopular policies poorly implemented – including excessive immigration, spiralling prices and a worsening rich-poor gap.
Finance Minister and Deputy Prime Minister Tharman Shanmugaratnam became the man of the hour when he increased taxes for the rich to be used on the needy and middle class.
One commentator called it a “Robin Hood” budget while another described it as an “appeasement budget”, implying it was to assuage public anger against large-scale immigration.
The 56=year-old finance minister also restored the employers’ contribution to the Central Provident Fund (CPF). It won him accolades, even from a few traditional critics.
His approach was to impose a greater “Wealth Tax”, including a hike of thousands more in property tax on high-end residences or new luxurious cars.
It was probably the first time the words “Wealth Tax” were used by a finance minister in a budget speech in this city.
High-end cars: He also imposed a tiered Additional Registration Fee (ARF), which can add S$100,000 or more to a top-end car.
One news report said a millionaire enthusiast cancelled the purchase of a new S$1.16mil without COE Ferrari F12. Reason: It would cost S$300,000 more under the new rules.
The ARF of a Rolls-Royce Phantom will cost S$1,088,000 in ARF – S$456,000 more.
To cut down dependency on foreign workers, a popular move in the eyes of the public, the finance minister imposed an additional levy of S$50-S$160 per worker.
Additionally, pressure will be put on some 142,000 S-Pass holders, mid-skilled foreigners.
Firstly, their minimum salary will be raised from S$2,000 to S$2,200 and, more importantly, the authorities will review their skill and quality.
One newspaper said that up to half, or nearly 70,000, will be affected by the tougher approval system. These people are potential, if not already, permanent residents.
The wage shock to employers will be significant, especially for industries where local replacements are difficult to get, OCBC economist Selena Ling was quoted as saying.
One observer said the strategy resembles socialism rather than capitalism in practice here for nearly 50 years.
It comes two years after former Minister Mentor Lee Kuan Yew retired from the Cabinet.
Special tax on the rich wasn’t often in his vocabulary, and he was unlikely to have approved it.
Lee’s past government also frowned on giving welfare benefits to the poor and needy, believing that they would encourage dependency.
The property market here is one of the priciest in the world.
While it is preventing ordinary wage earners from the market, it has, however, enriched many rich investors, including Malaysians, Indonesians, Chinese and Indians.
The higher property tax will apply to the top 1% of homeowners who live in their own residences – or 12,000 properties.
“This tax is a wealth tax and is applied irrespective of whether lived in, vacant or rented out,” Shanmugaratnam said.
“Those who live in the most expensive homes should pay more property tax than others.”
As budget talk intensified, it also made Shanmugaratnam one of the more popular ministers in Prime Minister Lee Hsien Loong’s Cabinet.
“It shows the finance minister understands the concerns and feelings of Singaporeans,” said an observer.
It also raised talk about potential leadership in Singapore.
Shanmugaratnam, who is Second Deputy Prime Minister, ranks behind Teo Chee Hean, the first DPM.
Some political analysts say that in terms of achievements and popularity, he would make a better front runner if the premiership were suddenly to fall vacant.
PM Lee, aged 60, and his two deputies are no more than four years apart in age. Teo is 59, while Shanmugaratnam is youngest at 56.
The finance minister became a PAP MP only 12 years ago. He is also chairman of the Monetary Authority of Singapore (MAS).
Theoretically, if PM Lee were to suddenly step down now, Teo – as first Deputy PM – would probably lay first claim. In party and government seniority, he is ahead of Shanmugaratnam.
Besides, Teo heads the powerful National Security and Home Affairs Ministry, and is Minister in charge of Civil Service.
Succeeding the Prime Minister is a much avoided subject, probably to avoid encouraging competitive in-fighting.
PM Lee has said he will step down after another 10 years, which means that either of his deputies would be too old by then to assume office.
However, politics in Singapore is changing and unpredictable.
No one can predict if the practice of having a small group of men in power meeting to decide on a successor will be able to continue for too long.
Although few expect the ruling People’s Action Party (PAP) will be replaced in the next election in 2016, its longer term future is cloudier.
Last week’s budget has strengthened the Second DPM’s prospect in the succession ladder. But his Indian ethnicity could stand in the way of his success in this predominantly Chinese city.
Meanwhile, a government critic-friend of mine summed up the achievement:
“There are still many things wrong in the country but this week I am feeling a bit better about the government than I did last week.”
This was first published in The Star).