The rising cost of living is not unique to Singapore.
Worldwide, the surge in food and energy costs has driven inflation and squeezed living standards.
However, what is unique in Singapore is the commitment to supporting Singaporeans through these difficult times. Because beyond expressing empathy, there is action. Action in the form of targeted fiscal support to cushion the impact of rising costs.
In a recent podcast, Straight Talk, Second Minister for Finance Ms Indranee Rajah shared how the PAP Government has designed a sustainable system of aid that ensures something for everyone, now and in the future.
Assurance in the time of inflation
From a pint of milk to a dozen eggs, the rising costs of daily necessities have become a major source of worry for many of us.
What then, can a government do to lessen the pain for its people without throwing away their future?
It is a delicate act, but as Minister Indranee noted, “The way we designed our GST system is that we provide assistance to those who need it most.”
While the GST hike affects all of us, higher-income earners are the ones who bear the brunt of the tax burden since they do not receive aid and are likely to spend more.
Meanwhile, the PAP Government has lined up “three buckets” of help to help Singaporeans tide against the rising costs, said Minister Indranee.
The first is the aptly named Assurance Package (AP), designed to mitigate the impact of the GST hike for all Singaporeans.
Besides cash payments for immediate relief, the AP is a comprehensive measure that includes Medisave top-ups for seniors, CDC vouchers for households and rebates to help with utility bills until 2026.
Next, the GST Voucher (GSTV) scheme, a permanent feature since 2012, also provides cash and utility rebates to support lower- and middle-income households.
As for the third “bucket”, Minister Indranee added that the PAP Government would continue to absorb the GST for school fees and subsidised healthcare to ensure that essential services remain affordable.
With such a multipronged approach, the value of the AP and the GSTV combined will help to offset the additional GST expenditure for up to five years for most Singaporean households and ten years for the lower-income ones.
And while these numbers might sound as random as the 38th Parallel, they are indicative of the kind of far-sightedness that goes into the PAP Government’s policy-making.
That is, creating a fair tax regime where everyone contributes what they are able to, while extending help to those who need assistance.
This allows Singapore to fund the future healthcare needs of an ageing population while shielding the majority of Singaporeans from the full impact of a GST hike. And in the meantime, allowing time for salaries to grow and kick inflation in the butt.
“So you can see…it’s all designed to buffer Singaporeans against the GST increase, whilst at the same time ensuring that we have a steady stream of revenue to make sure our parents and grandparents can be taken care of.”
And that, is just the kind of assurance we are looking for.
If you would like to hear the rest of what Minister Indranee said, click here for the full show.
Photo Source: MOF, Straight Talk/YouTube