THIS year’s Budget has helped Singaporeans cope with their top concern – rising prices – by putting cash in the hands of both low-income and middle class workers, said MPs yesterday.
While bonuses for the poor and the elderly have been par for the course for several Budgets now, this year’s Budget saw the so-called ‘sandwiched class’ receiving a big boost from a 20 per cent income tax rebate.
‘The savings can be considerable and help middle-income earners cope,’ said Hong Kah GRC MP Zaqy Mohamad on the Budget package Finance Minister Tharman Shanmugaratnam delivered in Parliament last Friday.
The economy grew by 7.7 per cent last year. But inflation – caused in part by high food prices globally – reached a 25-year high of 4.4 per cent last December, and is expected to rise further.
‘Some countries try to address the problem by putting price controls…The more practical way is what we do in Singapore,’ said Health Minister Khaw Boon Wan at a grassroots event last night.
‘Let the prices flow down to the market but we put extra money, because of good Budget growth, into Singaporeans’ pockets. And that’s the way we address rising inflation.’
The tax rebate announced last Friday is a 20 per cent reduction of the income tax paid this year on last year’s earnings. An individual who makes just under $100,000 a year and would normally pay $3,500 in taxes can save some $700 in cash.
This dwarfs the relatively modest sums some middle class workers received in previous Budgets and is equal to the largest payout of this year’s surplus-sharing programme – the Growth Dividends.
The dividends, which range from $100 to $700 in cash, will be given out in April and October, with more for the old and poor.
‘People used to say the middle-income have been left out, but not this year. They are getting something, so it’s a welcome relief,’ said tax expert Lam Kok Shang from KPMG.
MPs also noted that significant non-cash payouts were made: Children aged seven to 20 had their post secondary education funds upped by up to $600, and Medisave accounts of citizens 51 and above received up to $450.
Mr Tharman said on Friday that investing in education and growing jobs and incomes were the best offsets against inflation.
But even for the shorter term, education top-ups and wider subsidies will help parents cope with higher tertiary fees, Aljunied GRC MP Cynthia Phua said.
Tanjong Pagar GRC MP Indranee Rajah said that it was an equitable Budget with something for everybody, yet those in need will get more.
Tampines GRC MP Sin Boon Ann wished small businesses had more help to cope with rising costs, while Pasir Ris-Punggol GRC MP Charles Chong felt rising health-care costs should be addressed. MPs said they would raise these and other issues when Parliament sits from Feb 25 to debate the Budget.
Commenting on the bumper Budget surplus of $6.45 billion, Mr Sin said it made the generous giveaways this year possible.
But Foreign Minister George Yeo sounded a note of caution when asked why there were not even more rebates. He said at a grassroots event: ‘When we look a year ahead, there are clouds on the horizon. So we have to be careful.’
Source: The Sunday Times 17 Feb 08