BUDGET DEBATE – DAY 2
BY CLARISSA OON
THE signs were there a year ago that the two-point hike in the Goods and Services Tax (GST) was not needed, Workers’ Party chairman Sylvia Lim claimed yesterday.
Back then, the Government’s own estimates had indicated it would have more than enough in its coffers to fund additional social spending, without having to raise the GST from 5 to 7 per cent, said the Non-Constituency MP.
Ms Lim reminded the House that her party had pointed out the projected increases in personal income tax and other revenue streams during last year’s Budget debate, and was criticised for doing so.
Now, the record $6.45 billion Budget surplus has proven that the GST increase was “without compelling reasons”, she said.
The debate on the wisdom of last July’s GST raise continued in Parliament yesterday.
Ms Lim and Nominated MP Loo Choon Yong called for the GST to be reduced back to 5 per cent.
In response, at least two PAP MPs said it was better to proceed with caution. They advocated against tinkering too much with the existing surplus and saving for a rainy day instead.
By raising the GST, the Government has “compounded the inflation pressures on the people”, argued Ms Lim.
Against a spike in prices of food, transport and other essentials, “adding on another 2 per cent on a higher base price has increased the cost of some items by more than 20 per cent”, she said.
Wages have not caught up with the rising cost of living, as “only very few people’s incomes have risen by 20 per cent since last year”.
She urged the Government to also consider removing GST altogether on essential food items.
NMP Loo, in calling for a suspension of the two-point increase, cited the huge surplus and the higher-than-estimated corporate and personal income tax collections.
He acknowledged that the cut would mean forgoing GST collection of about $1.35 billion for the next fiscal year.
“I understand the reluctance of governments and revenue collectors to give up what they have collected, especially when they have spent political capital on it.”
However reducing the GST would “reaffirm in all our hearts that this Government cares and will always respond to the people’s hardship”, he said.
Responding to the calls for reducing the GST, Dr Ong Seh Hong (Marine Parade GRC) said in Mandarin that he supported the Finance Minister’s policy of keeping the Budget “prudent, pragmatic and forward-looking”.
He said the Government should not encourage the “erroneous expectation” among Singaporeans that a Budget surplus only means more handouts, or “hongbao”.
Instead, he said they should be looking at how the Budget can “maintain the country’s competitiveness”.
Improving the employment prospects of low-income Singaporeans through training is a more lasting way to help them cope with rising costs, suggested Mr Yeo Guat Kwang (Aljunied GRC) in Mandarin.
The Workers’ Party’s arguments reminded Mr Yeo of a story by the classical Chinese philosopher Zhuang Zi.
In the story, a fish in a shallow trench appeals to a passing scholar for help. The scholar tells the fish to wait while he fetches water from the sea.
“By the time you come back, I will be a dried-up, preserved fish in the market,” says the fish.
Now, said Mr Yeo, if the scholar were a People’s Action Party man, he would tell the fish: “I will give you a bit of water first, but come with me and I will show you how you can stand on your own.”
What about if Ms Lim met the fish, asked the MP rhetorically.
He said she would probably say: “I have no water to give you, but I sympathise with you from the bottom of my heart. I will ask my government to give you all their water, and tell of your plight to the world.”
Concluded Mr Yeo: “Eventually the fish will still end up in the salted fish bin in the market.”