Reflections on Budget 2008
Posted by theonlinecitizen on February 22, 2008
By Eric Tan Heng Chong
My parents taught me to be gracious when you receive a gift, and
not to scrutinise it. This year Singaporeans received a ‘gift’ in
the form of the Budget. There are many good things about the Budget
for both individuals and corporations.
But despite what my parents taught me, I cannot help feeling
that perhaps I must re-examine these gifts. My instincts tell me
that the giver once took a lot from me and is now only returning
some to me. I remember the increases in taxes and charges; these
were permanent. The gifts to me now are one-off goodies.
I recognise that sometimes, for the greater good, I must suffer
some loss. The taking, however, is becoming too much to bear, and
the reasons given for it not good enough. It is time the government
takes less and gives some back. I would suggest the following ways
to do it:
Remove GST for essential goods like food, utilities and
clothing. This a 7 per cent reduction in the price of these goods
and will certainly be a significant off set against inflation.
Furthermore this reduction will benefit all segments of
society.
Reduce the tax on petroleum and diesel. This will reduce
transportation costs for all. In 2007, the government collected
S$373.1 million in petroleum excise duties. In the 2008 Budget they
plan to collect S$381.6 million. I believe that there is
flexibility for them to tax less in this category.
Reduce the cost of public housing by not benchmarking the price
to private housing. Currently, the government decides the cost of
HDB flats based on how much private housing costs, and forgets that
it is providing subsided government housing. This is only a market
price subsidy. The government should instead base the price of HDB
flats as a discount on the cost price (including land cost), making
it a real cash subsidy. There is no point in pricing the flat high
and then giving discounts or grants to selected groups.
Freeze price increases wherever possible. I am not convinced
that some of the increased charges are justified. While the
government tells us that it is very concerned about inflation, it
proposes raising university fees, Medishield premiums, ERP charges
etc. These increased fees are a double whammy for the average man
in the street. The government tells us that it has no control on
inflation for many goods, but it certainly has control over these
charges—it is the government’s duty to bear the higher costs in
these cases, for they are in essential areas of education,
healthcare and transport.
We, the common people, are not asking for handouts, one-off or
otherwise. We are only asking the government to take less money
away from us. The next question that comes to mind, then, is how to
make up for the reduction in government revenues, should these
measures be taken.
Perhaps a major cost-saving initiative in the budget can do
this.
Since the government told the people not to expect such goodies
next year as there is no certainty that the economy will continue
to do well, it is prudent for the government to maintain a lean
cost structure and plan for some cost savings. This year’s Budget
did not have any visible major cost-saving initiative—in fact,
there was a plan to increase operating expenditure by 10.6% in 2008
as compared to 2007. This increase amounts to S$2.78 billion, and
perhaps a re-examination of it is necessary.
A reduction in operating expenditure would free up some funds
for the government to help the people. The former Speaker of
Parliament in 2002 spoke up against excessive government
expenditure, calling some government buildings “The Seven Wonders
of Singapore”. This is one such accolade that we can do
without.
Perhaps I am not living up to my parents’ expectations in being
gracious in accepting gifts. But true givers give from their own
bounty without expecting anything in return. The money that we are
being given now is not even their money; it is the people’s money,
our money.
I recently met a businessman and asked him what he thought of
the budget. He replied that he was just waiting for when they will
collect it (the money) back. I hope he is wrong, and that the next
Budget will take less and give some.
About the author: Eric is a member of The Workers’ Party. The
above article is written in his personal capacity and as a brief
commentary on the Budget.