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SINGAPORE : Budget 2007 has something for everyone, said Second Finance Minister Tharman Shanmugaratnam.
Wrapping up the three-day debate in Parliament, he explained the Budget was designed to provide opportunities for all to succeed, if they make the effort.
Almost 60 MPs spoke during the debate on the government's financial policy for the year.
Many shared personal anecdotes on the difficulties faced by their constituents and how they braved the challenges and succeeded.
Mr Tharman Shanmugaratnam said one main question had been 'Is the budget fair to all Singaporeans?'
Agreeing there is a need to help buffer the impact of the GST on the poor, he gave the assurance the government will find ways to do so.
Most importantly, he said, Workfare would systematically and permanently help low-income Singaporeans and it would be much more than the GST increase.
But Mr Tharman explained why zero-rating essential items or having a multi-tiered GST system is not a good way to help the poor.
The first reason is that most of the spending of lower-income homes is not on essentials.
Based on the household expenditure survey, the most commonly cited eight essential items make up only five percent of the expenditure of the bottom 20 percent of households.
Even if non-cooked food, utilities and public transport were added, the figure would come up to slightly more than a quarter of the expenditures of a typical bottom 20 percent income household.
The finance minister said: "There's another reason why exempting essentials will not help the lower-income group. It means GST on the rest of the items will have to be higher. This would affect the lower-income group too, and it would especially hit the middle-income group.
"That is why we have decided that the most effective way of raising revenues to help the poor is to administer a simple across-the-board GST rate on all products in the market and to, instead, compensate the lower-income group through more offsets and use the GST revenue to fund Workfare.
"Rather than exempt essentials or food from GST and have the bulk of the benefits go to those who are not in the lower-income group, we'd rather have a clean GST rate for all items and use the revenue to help the lower-income group."
In fact, the lowest 20 percent of income earners will receive benefits that will offset the effects of the GST for up to 19 years.
Mr Tharman said the Budget aims to build a land of opportunity and hope, and to take care of all its citizens.
A key objective of the Budget is to strengthen social cohesion in the wake of globalisation.
This is a topic that is expected to be dwelt on further when MPs begin debating on the expenditure allocations for the various ministries from Friday.
- CNA/so
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