Tuesday, 19 November 2013

Govt 'will look out for asset-rich, cash-poor'

Fairer tax regime, help schemes for sandwiched elderly: Lawrence Wong
By Andrea Ong, The Straits Times, 18 Nov 2013

THE Government's move towards a more progressive tax system will help address the concerns of asset-rich, cash-poor older Singaporeans, Acting Minister for Culture, Community and Youth Lawrence Wong said yesterday.

In designing its tax system, the Government is "very mindful of this particular group of sandwiched Singaporeans", he said in response to concerns raised by residents of Joo Chiat in a dialogue.

For instance, it has moved away from using Housing Board flat type as the qualifying criteria for Budget surplus sharing schemes, he said.

These schemes now use the annual value of property, which Mr Wong said is a "fairer system" because owners of lower-end private property can also benefit.



Many of the Joo Chiat residents at yesterday's dialogue, which was held at the end of Mr Wong's visit to the single-member constituency, were retirees living in private property.

Three of them were unhappy that although they had little or no income, they or family members could not qualify for the Community Health Assist Scheme (CHAS), which subsidises care at private general practitioner clinics.

Others were worried about large hospital bills.

Opera Estate Neighbourhood Committee chairman Chris Chen, 70, said he had to pay a hefty property tax for his home, which he bought when it cost "less than the cost of buying a car today".

Mr Wong said the Government's challenge is how to design a progressive tax system that is fair and just, even while looking after people like Mr Chen.

"We do need to find ways in which we can continue to generate more resources in a sustainable fashion, in a fair and just way that will allow us to redistribute these resources to those in need."

Elaborating on the Government's thinking, Mr Wong said it is fair for "those with means" to pay more taxes, defining "means" in two ways: income and wealth.

"Those with more income ought to pay more, I think that's fair. Those with more wealth, wealth in terms of assets, ought to pay a bit more than those with less," he said.

The Government is already committed to spending more in areas like health care. It also draws on the Net Investment Returns of the reserves to fund its spending, he added.

But it also wants to avoid the plight of some European countries, where future generations will have to foot the bill for current debts.

On residents' health-care concerns, Mr Wong said those who do not qualify for CHAS can appeal to the Health Ministry or look to other social assistance measures like ComCare, which comes with "very flexible" criteria.

On whether Singaporeans, especially those from the higher-income group, can expect to pay more taxes in future, Mr Wong told reporters no immediate tax increases are expected. The Government is "trying to do the best we can" with what it has today.

But, he added: "Eventually, if we continue to spend more, then we must find ways in which we can cover this future spending with additional revenues."

Reiterating a point he made in the dialogue, which had "A Caring Community" as its theme, Mr Wong called on citizens to also think of how they can help one another - in true kampung spirit.

"Then we will have more balanced responsibilities between the Government and community, all doing our part to help the vulnerable segments of society."













S'pore football team 'to have good mix in time'
By Andrea Ong, The Straits Times, 18 Nov 2013

IT MAY be just a matter of time before there is a good mix of Singaporeans in the national football team, said Mr Lawrence Wong, Acting Minister for Culture, Community and Youth.

He was responding to a question on last week's Sunday Times interview with national under-23 coach Aide Iskandar, in which the former national skipper noted the dearth of Chinese and Indian professional footballers.

Yesterday, Mr Wong said: "Over time... if we continue the good development programme at an early age, reaching out to as many students as possible and there's a good pipeline of young people coming up in football, I'm sure that you will have more and more Singaporeans representing the different communities in our national team."

Noting, for instance, that there is a "good mix" of students of all races at the Singapore Sports School, he said such programmes encourage students to compete at the national level.

Mr Wong also urged those interested in sports and football to play competitively.

On the Lions needing greater drawing power to fill the new 55,000-seat National Stadium, compared with the current 7,500-seat Jalan Besar Stadium, Mr Wong said that he has encouraged the Football Association of Singapore to think of ways for players to further engage the community.

"The players themselves need to go out and engage the community and build that fan following," he said.

But he also hopes Singaporeans will come forward to cheer for the national team at the new stadium, just as they did at the old stadium during the heyday of the Malaysia Cup.





More progressive tax system expected in Singapore
But Govt will ensure higher-income group not overburdened: Economists
By Alvin Foo, The Straits Times, 20 Nov 2013

ECONOMISTS are expecting an even more progressive tax system to emerge here in the next few years to give lower-income earners a leg up.

But they said the Government will ensure higher-income earners are not excessively burdened.

The wheels were set in motion with measures unveiled in this year's Budget, and economists believe this trend will continue in next year's edition.

Ideas being bandied about by the economists include a further adjustment in asset-related taxes and a cut in the income tax rate for lower-income brackets.

"They've started the ball rolling this year, and I won't be surprised to see this continuing with the upcoming Budget," CIMB economist Song Seng Wun told The Straits Times.

"It's about being fair to all. The whole idea is you don't want to penalise higher-end taxpayers excessively."

DBS economist Irvin Seah said factors such as increased social spending, higher outlays on public infrastructure, an ageing population and a still fairly wide income gap fuel the likelihood of an even more progressive tax regime.

He added: "While this implies more spending to help the lower-income groups, it will also mean a higher tax burden on the higher-income earners to fund the fiscal spending."

The rising income gap here is a key reason that this move is likely, according to United Overseas Bank economist Francis Tan.

He added that a more progressive tax system will ensure that the Gini coefficient - a widely used measure of income inequality - here decreases or at least stabilises.

A progressive tax is one which takes a larger percentage from high-income earners than it does from low-income individuals.

On Sunday, Acting Minister for Culture, Community and Youth Lawrence Wong touched on the Government's move towards a more progressive tax system during a residents' dialogue.

Elaborating on the Government's thinking, Mr Wong said that it is fair for "those with means" to pay more taxes, defining "means" in two ways: income and wealth.

"Those with more income ought to pay more, I think that's fair. Those with more wealth, wealth in terms of assets, ought to pay a bit more than those with less," he said.

To make the tax system more progressive, the Government announced in this year's Budget that it is raising property tax rates for high-end residential properties.

The largest increases will apply to investment properties that are not occupied by their owners.

Possible measures in next year's Budget may include adjusting asset-related taxes on big-ticket items such as property and cars.

"Given the current asset-rich, cash-poor situation in Singapore, there could be further adjustments in property tax to make it even more progressive," said DBS' Mr Seah.

One obvious measure could be a higher asset tax on the second and subsequent properties and cars, said CIMB's Mr Song.

He added: "That's a more direct measure of wealth, and those lower-income groups with fewer assets will benefit more."

Another could be reducing the income tax rate for lower-income brackets to benefit the middle-income group, said Mr Seah.

UOB's Mr Tan said another possibility would be to lower the income for the highest tax bracket of 20 per cent from the current $320,000 to say $250,000.

But he also pointed out: "Tweaking the income tax is tricky as it may reduce the attractiveness and competitiveness of Singapore as a place to work, play and live."

Raising the goods and services (GST) tax rate from the current 7 per cent is an option for the Government to raise additional revenue down the road, said economists.

However, the economists added that this has to be done in tandem with more generous rebates to lower-income families.

That's because such a tax is regressive, meaning that lower-income households will be more affected as a proportion of their overall income since everyone pays the same rate of tax.


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