Claims that middle class is overtaxed are ‘outright falsehood', Govt remains 'very focused' on advancing group's well-being: Lawrence Wong

SINGAPORE — After several Members of Parliament (MPs) raised concerns that middle-income earners had been neglected in this year's Budget, Deputy Prime Minister Lawrence Wong said on Friday (Feb 24) that the Government "remains very focused on advancing the well-being of the broad middle of society".

Mr Wong, who is also Finance Minister, said the Government does this by ensuring that the middle class continues to enjoy real income growth, face low tax burdens and receive more in benefits than they pay in taxes.

For example, median household real income growth was 3.2 per cent a year over the last decade, which is a faster pace than that experienced by middle income earners in the United States, most European countries and far above other Asian societies such as Japan and Hong Kong.

And while some MPs have said that the Government is taking too much and giving too little, Mr Wong said that the tax burden on the middle class is in fact lower than that in other countries.

Mr Wong was giving his wrap-up speech on Friday after three days of debate on Budget 2023 where a total of 55 MPs and three political office holders spoke.

Among them was Non-Constituency MP (NCMP) Leong Mun Wai, who said on Wednesday that the middle income in Singapore are “already overtaxed relative to their income”.

On this point, Mr Wong noted that the effective tax burden in Singapore is around 10 per cent of income, which is lower than the US, the United Kingdom and Finland based on publicly available data.

“I think the facts and figures speak for themselves,” said Mr Wong. “What Mr Leong said is an outright falsehood.”

WHY IT MATTERS

With some describing this year’s Budget as a “Robin Hood budget”, Leader of the Opposition Pritam Singh said on Wednesday that this suggests that there are two Singapores — the wealthy on one side, and the lower and middle-class on the other — pitted against each other.

This, Mr Singh said, is inaccurate but he said Singapore must act decisively to ensure that such a scenario is prevented.

On this note, Mr Wong said: “This has in fact been the People’s Action Party Government’s steadfast approach all these years, so I thank him for agreeing with what we are doing.''

While he agreed with Mr Singh, who is also secretary-general of the Workers’ Party, that fiscal redistribution should not be about pitting one group against another, Mr Wong disagreed with Mr Singh’s characterisation of the two notional Singapores.

“In particular, he suggested that if you are unable to upgrade to a condominium, or landed property, or own a car, you will be in the second Singapore,” said Mr Wong, in reference to the lower and middle-class.

“But the test of social mobility cannot be about owning land and property or purchasing a car. Let's not perpetuate such narrow definitions of success.”

So as to prevent this version of Singapore and strive for a more inclusive and fairer society, Mr Wong said that this year’s Budget serves this purpose.

SOCIAL MOBILITY

In his speech, Mr Wong also touched on social mobility, saying how the Government’s moves to help lower-wage workers through Workfare and Progressive Wages are “showing results”.

“Over the past five years, our lower-wage workers have consistently seen higher income growth than those at the median,” he said, adding that the Government will continue its efforts.

Beyond expanding the Progressive Wage Model to more sectors to cover a “vast majority of lower-wage workers”, more is being done to increase the work prospects and wages of skilled tradesmen and to professionalise these trades.

On the educational front, more is also being done to help graduates entering the workforce, especially in helping Institute of Technical Education graduates find better employment outcomes.

And for the younger ones, Mr Wong hopes to further narrow the preschool enrolment gap between children from lower-income households and their peers.

“Besides dealing with inequality, we must ensure that social mobility remains alive and well in Singapore,” he said.

“We have done better in this aspect than many other advanced economies. But any society which has been stable for a long time tends to stratify, and that’s why we must collectively lean against this tendency, and do more to uplift disadvantaged groups.”

But ultimately, what is the best way to tackle inequality and sustain social mobility? Mr Wong says it is to ensure meritocracy works well for all Singaporeans.

“We are not done yet, and we are actively working on all fronts to minimise social barriers and encourage mobility — because this is what Singapore has always been about, and must continue to be.”

FISCAL SLACK

Mr Wong also debunked comments from NCMP Leong that Singapore has excess fiscal resources.

Mr Leong had claimed that S$24 billion injected into funds in the financial years of 2022 and 2023 were excess as actual expenditure would only occur in the future.

However, this is not accurate, Mr Wong clarified, as all spending in the Budget involves resources set aside to meet Singapore’s needs, such as strengthening safety nets, improving productivity or building up critical infrastructure.

While some are long-term funding commitments, others funds have disbursements that are not as predictable — such as the outlays from the Changi Airport Development Fund for the development or Terminal 5 and other aviation facilities that are made in accordance with the progress of the infrastructure projects.

“And for such large and lumpy expenditure items, the responsible thing to do is to set aside some resources whenever we have the means, so that we smoothen out the spending and we do not end up in a crunch when the monies are needed.”

Should there be revenue upsides, Mr Wong said the Government would put these resources to “good use” by channelling them to support Singaporean households and businesses.