DPM Tharman outlines strategies to tackle inequality among citizens
01 March 2012
SINGAPORE: Deputy Prime Minister Tharman Shanmugaratnam on Thursday outlined four strategies in Parliament to tackle the issue of inequality among citizens.
The first strategy is to grow the economy, so as to raise income levels across all segments.
The second strategy aims to preserve and enhance social mobility starting from young.
Another strategy is to encourage a partnership with the community through voluntary welfare organisations and community development councils and lastly, to redistribute wealth among Singaporeans.
Mr Tharman said: "We will have to redistribute through a fair system of fares and tax benefits to provide significant benefits for the low-income group to keep up and upgrade, but avoid placing excessive burden on the middle income group. (This system) is there in all our budgets, including this year's budget."
As for the low income, Deputy Prime Minister Tharman Shanmugaratnam said there are already schemes in place to help them.
These include the Workfare and Comcare schemes as well as the enhanced housing subsidies.
Mr Tharman said these are major interventions made in the last five years and these measures are not new.
"What do taxes mean, and what do transfers and benefits mean over a lifetime for a low-income household? If you add it all up together, you'll find that for every dollar that a low-income household pays in taxes, they get back S$4 in benefits from workfare, housing benefits, healthcare benefits to education subsidies. This is a simple expression of how progressive our system is. Everyone pays some taxes because everyone should contribute to a better Singapore. But the low-income group gets back much more in benefits to support work, education and housing.
"In the last five years, the transfers we've provided to the lower income group, net of the taxes they pay, which is basically GST, and transfers net of taxes amounted to almost 20 per cent of their incomes. It is a significant increase from the previous five years. So, we've moved significantly in the last five years through a range of interventions towards addressing the issue of inequality and building an inclusive society. This is not new. This is not post-GE 2011."
But Mr Tharman added that benefits and transfers given to the low income must not end up as disincentives.
MPs like Mr Ang Hin Kee and Mr Edwin Tong had raised concerns about making sure Singapore does not end up a welfare state.
Mr Tharman agreed, saying that the government should be careful when it comes to giving out benefits.
He said the government has to be focused in its intervention strategies and these include addressing social mobility at the early stage and helping the lowest wage workers.
He said: "There are incentives effects if you provide too much benefit when your incomes are low. It is the natural workings of society. It's not that people are trying to gain on the system. It is natural human behaviour that you have an incentive to stay where you are and not upgrade or you will start losing your benefits. Every society has found this to be a problem.
"As you expand benefits, more people try to stay within the group that gets the benefits instead of upgrading beyond that threshold. We got to be quite careful, and preserve that drive to do better, learn a new skill and move your family up because that drive at every level of society defines us. It's not just the most talented people or the most educated that have this drive. It is actually that drive among ordinary Singaporeans that defines us. Let's not lose that and this means being focused in our interventions as we go ahead."
While extending benefits to those who need it, Mr Tharman was also cautious about suggestions to extend the Special Employment Credit scheme (SEC) to more groups.
These include homemakers, ex-offenders and single mothers.
Though he said Dr Lily Neo's suggestion to extend the SEC to those who did not attend special education schools would be addressed by the Ministry of Community Development, Youth and Sports in their Committee of Supply debate.
Mr Tharman said: "The SEC is a major intervention in the job market. Not everyone faces the same disadvantage because some homemakers move in and out of work and they're not necessarily at a disadvantage when they come back. I would be very careful about extending what is considered a major intervention, in favour of older workers to more and more groups."
Moving on to the middle income group, Mr Tharman said one strategy is to raise the real incomes of the sandwich class.
This, he said, will help them cope with the cost of living.
He shared that median households in Singapore have seen healthy income growth over the past five years, at an average of 3.2 per cent per year, in real terms.
"This 3.2 per cent growth is frankly quite rare over the last five years. In Hong Kong and Taiwan, it was negative over the last five years for median income growth in real terms. There was positive growth in South Korea but it was lower than us. Most developed countries had significantly lower median income growth over the last five years so we haven't done badly."
Another strategy to help the middle-income group is to keep taxes low.
Mr Tharman said this is a very important feature of Singapore's tax system, which is lower than most developed countries.
He gave the example of how a middle-income family which owns a car gets about 80 cents back for every dollar in taxes they pay.
And the benefits are more for those who don't own a car.
Mr Tharman said: "If you don't own a car, even as a middle income Singaporean, you get back $1.50 for every $1 tax you pay over your lifetime. There are very few systems that provide this. And for those who want to have a car for the convenience because they have a large family or with elderly persons who need ferrying around, it's still a very fair system. There are very few systems where for every $1 of tax you pay, you get 80 cents back over your lifetime for the average household."
Its pretty ironic for a million dollar Minister to talk about income equality isn’t it?
These idiots in the cabinet are quite good at making things super complex and trying to sell shit to you as goodies all just to maintain there own millions dollar pay checks.
To hell with all the schemes.
All they have to do is to do away with GST for basic necessity, reduce the cost of public transports and public housing, make utilities more affordable and have a better health care service.
This is all it takes to make Singapore a better place to live in.
And if a certain MP, who stupidly drank water from the water tank with the dead maid, is to ask where to get the money.
You just cut the bloody pay for the Ministers and MPs and increase the tax for the bloody top 10% earner in the country. These people have enough money to last 3 life times while some Singaporeans are starving to death.
This alone make me sick to the core.