Described as “masterful” and “well-rounded” in some quarters, Finance Minister Lawrence Wong delivered a Budget that also heralds an improved and stronger social compact in Singapore .
The groundbreaking measures will further reduce income inequality and also can be seen as a doubling down on the Party’s founding value of a fair and just society.
For Singaporeans, Budget 2022 should be viewed in three actionable themes: uplifting lower-wage workers (LWWs), establishing a fairer tax system and supporting the future generation.
The fight for LWWs
The Party is synonymous with improving the lives of LWWs; in fact, one would be hard-pressed to find another political party in Singapore that is as active about uplifting LWWs – and not just in terms of wages, mind you, but their welfare and long-term future by setting aside S$9 billion over five years to support the LWWs.
Take for instance the new Progressive Wage Credit Scheme. Knowing that any wage increment will be met with resistance, the Party decisively made the call to introduce this new scheme, which will co-fund increments for LWWs for the next four years.
Or the Progressive Wage Model (PWM). Other than extending it to other sectors, the PWM will be extended to in-house cleaners, security officers, landscape workers, administrators and drivers across all sectors. The PWM will ensure steady wage growth through upgrading of skills and improving productivity.
Next, to assist LWWs to plan for their future and retirement there’s the Workfare Income Supplement (WIS). It supplements LWWs’ income and retirement savings through cash payments and CPF contributions, will cover more people as the qualifying income cap will be raised from S$2,300 to S$2,500 per month from Jan 1, 2023.
With these measures, LWWs’ incomes are expected to grow faster than the median wage growth over the next decade, said Minister Wong.
Viewed in totality, these measures are not designed with a short-sighted, populist and often dulcet voice asking for a universal minimum wage. As a matter of fact, these measures give LWWs pride of having a career that offers real progression and prospect in the long run, safe in the knowledge that the opportunity for something better is always available if they put in the effort to upskill. The Party believes it is the right and sustainable way of building a career.
A more equitable tax system
Budget 2022 also moved boldly into an era of a more equitable tax system.
With the increments of Personal Income Tax, Property Tax and Additional Registration Fee for cars, the Party has signalled its commitment to reduce income inequality, with the rich contributing to a larger share of taxes and will ultimately raise S$600 million.
“These tax adjustments will help to raise additional revenue and also contribute to a fairer revenue structure. That means everyone chips in and contributes to a vibrant economy and strengthened social compact, but those with greater means contribute a larger share,” said Minister Wong.
For the lower-income, they do not pay income taxes and are not affected by the two wealth taxes. That said, the Party is fully aware of the potential burden of the Goods and Services Tax (GST) if it were to increase this year. That is why the GST hike will be delayed until 2023 and staggered over two years.
Moreover, the earlier announced Assurance Package will be increased from S$6 billion to S$6.6 billion and when the package ends in 2026, the permanent GST Voucher scheme will continue to cushion the impact. Just the Assurance Package alone will offset 10 years of additional GST increase for lower-income families.
This Robin Hood-esque approach will ensure a fairer tax system where everyone chips in to contribute to the economy.
Supporting the future generation
Now that the short to medium term is settled, the Party looks far ahead, firmly with the future generation in mind.
Often, the needs of lower income families are interconnected and multifaceted. To that end, Comlink – already expanded national-wide last year, covering 14,000 families with children living in rental flats – will be scaled up even further. The KidSTART programme will be scaled up nation-wide and will support 5,000 children from next year. Likewise, the UPLIFT Community Network will also be expanded to support more students in disadvantaged families through mentorship. Second-timer families with children living in rental flats will be supported by the enhanced Fresh Start Housing Scheme.
Social mobility continues to be top of mind for the Party and we want to level the playing field for the next generation.
An improved and stronger social compact
As Singapore begins to take her first steps toward a post-pandemic world that is full of unknowns, Singaporeans can be comforted by this year’s Budget for it promises a brighter future and more importantly an improved and stronger social compact.
“We want to uphold that sense of obligation to each other and strengthen the assurance that, whatever the challenges we face, we will always have each other’s back,” said Minister Wong.
Let’s chart our new way forward together.
Cover photo credit: MSF Facebook