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Goodies for all expected in Budget 2015
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THERE are continuing expectations of a raft of goodies for all Singaporeans - whether through tax reliefs or other rebates - from Budget 2015. And although higher personal income taxes are unlikely to be on the cards this year, participants at The Business Times' Pre-Budget Roundtable 2015 believe it is only a matter of time before tax rates are increased.
Indeed, with Singapore celebrating its 50th year of independence and Budget 2015 being viewed as a pre-election budget, there is widespread anticipation of generous handouts for all citizens.
"(Even if we) cast aside the elections, it's SG50 - it's time to share with Singaporeans the successes of the country, and it's a good time to give something back to the people," said DBS economist Irvin Seah.
"For the lower-income group, I expect more improvements to the WIS (Workfare Income Supplement) as this is in line with our inclusive growth model. I think there could also be some focus on the middle-income group, also known as the 'sandwich class'," added Mr Seah, citing Service and Conservancy Charges rebates or U-Save special payments as possible goodies to look out for.
As for whether there is any room for taxes to be raised this time around, panellists say this is unlikely - especially with the possibility that Budget 2015 could be the last before the next general election (due by January 2017) is called.
But with personal income tax rates already much lower than in other countries, and as public spending inevitably rises with a fast-ageing population, participants believe it is only a matter of time before tax rates are hiked.
Discrediting the oft-cited view that higher tax rates would impinge on Singapore's competitiveness and attractiveness, Lien Foundation chairman Laurence Lien said: "I think we have to be more confident in ourselves. If you have money, Singapore is paradise on earth (and) it's an incredible place to live. So for the talented, they'll still come (as long as) we're not talking about a 10 per cent increase."
In his Budget 2014 debate round-up speech last year, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said that Singapore must "keep all options open" when it comes to meeting rising fiscal demands, even as it strives to keep the economy vibrant and competitive.
"It doesn't mean that we keep taxes unchanged . . . there is room over time to enhance our asset taxes," Mr Tharman had said, adding that this is provided the system of taxes and transfers stays equitable, and the tax burden on the average Singaporean household is kept low.
Still, Mr Seah stressed that higher taxes should not be seen as a "quick fix" to the growing need for greater public expenditure: "We do not want to use this as a quick fix to solve the pressure on our social spending going forward. The important thing (is to) generate enough tax revenue from higher productivity growth (and) higher-quality growth, and then use that to subsidise social spending."
More from the BT Pre-Budget Roundtable 2015:
- Productivity drive should focus on topline growth now
- Extend minimum wage to more sectors, cut foreign worker levies
- Quotes: On the CPF
- Quotes: On property measures
- CPF rethink needs to address structural retirement inadequacy