Shift to higher social spending ‘will be done in a fair, practical way’

SINGAPORE — As Singapore makes the shift to higher social spending, the Government will do so in a fair, practical way without overburdening the middle-income, said Deputy Prime Minister Tharman Shanmugaratnam yesterday as he rebutted what he said was scare-mongering and false promises made by some opposition parties during the election campaign.

Some parties have avoided talking about the taxes they would have to raise to carry out their proposals, and have also talked about what the People’s Action Party will do after the elections, he said at the PAP’s Bukit Panjang rally at a field in Petir Road last night.

The scare-mongering “is just cheap”, as he had said clearly at this year’s Budget that the Government has raised the revenues it needs for the next five years.

The Government changed the Constitution this year to be able to take more of the returns earned by Temasek Holdings for spending on its Budget, Mr Tharman said. It also increased income taxes for the rich and increased property taxes for high-end properties while lowering property taxes for smaller public flats.

“We’ve done it in advance, no bluff, no pretence,” he said.

“We’ve made it very clear we have extra spending needs, especially in healthcare, where we are more than doubling our healthcare spending. We need the revenue, we’ve taken the measures upfront. So, when I listen to some of the scare-mongering that is going on, not only do they avoid talking about their taxes that they would have to raise if their proposals were to be put into practice — they avoid talking about that — but they also scare-monger, talking about what the PAP will do after the election. That is just cheap. We have been upfront,” he said.

The Government would try to keep the Goods and Services Tax “low” in the years to come, he added.

Mr Tharman also busted the myth peddled by some in the hustings, to take more investment income from the reserves to fund greater spending.

“We are already maxing out on the investment income from our reserves,” he said. The Constitution allows the Government to spend 50 per cent of income from the reserves.

“There’s no more money left there that you can just take without compromising the next generation. And it’s not as if we are storing up a whole lot of savings for the future generations to have a better life than today. All we are doing is making sure that each generation gets the same benefit.”

On the parties that have proposed giving S$300 to each child or elderly Singaporean, or both, Mr Tharman said there is no way of giving something to everyone without raising taxes for the middle income. “Let’s be clear about it and see through promises that are false promises.”

There is no country in the world that has provided something for everyone without raising middle-income taxes, he said.

Addressing the Singapore Democratic Party’s proposal of a healthcare system modelled after France, Mr Tharman said the French system is “actually quite a good healthcare system … high quality, caring, humane”.

But it is an extremely expensive system for the middle-class, he said. Income tax for the average worker there is 15 per cent and its Value Added Tax (similar to the Goods and Services Tax) is 20 per cent, although there are some discounted tiers for food.

In countries that have healthcare that is free or close to free, “the average citizen is paying for it and paying for it big time”, he said. “And they’re also paying more because everyone including the rich and upper-middle income group are also benefiting. It’s not a fair system.”

“It’s a complete myth to think these are egalitarian systems. They are basically systems of middle-income tax, and the middle-income then asking, please give me benefits back. And they still don’t get the same benefits that you can get in Singapore,” said Mr Tharman, who is also Finance Minister and a candidate in Jurong Group Representation Constituency.

Singapore has low taxes on the middle-income, and a system where the rich pay more and the poor get more, he said. The middle-income here get S$2 in subsidies for every S$1 of taxes paid, and the poor get S$6 in subsidies for every S$1 of taxes paid. The top 10 per cent of earners here get S$0.20 in subsidies for every S$1 of taxes paid. Singapore’s system is also fair in not pushing the burden to the next generation, he said.

Singapore’s new path is one that offers great optimism to Singaporeans, that will enable everyone to make the most of life, and one of greater collective responsibility, said Mr Tharman. It is admired throughout the world because it is starting from a position of strength as a society and as an economy, he said.

“We have more to do. We are not a perfect country, we are not a perfect government, there’s more to do … and we’re quite honest about it,” he said. “That’s what good governance is about, that’s what good politics is about. Never pretending we are perfect, being straight about the solutions being honest about the challenges and telling everyone upfront where the money is coming from.”