Skip to main content

Advertisement

Advertisement

Increase taxes temporarily to fund a universal basic income scheme during Covid-19 pandemic, says NMP Walter Theseira

SINGAPORE — To help Singaporeans who have difficulties coping during the Covid-19 pandemic, Nominated Member of Parliament (NMP) Walter Theseira has proposed that the Government set up a temporary universal basic income scheme. This will provide a weekly monetary payout to all Singaporeans for 12 weeks, or even longer, depending on the effects of the ongoing crisis.

The Mubi scheme aims to give all Singaporeans S$110 a week for 12 weeks, paid out through existing electronic payment channels.

The Mubi scheme aims to give all Singaporeans S$110 a week for 12 weeks, paid out through existing electronic payment channels.

Follow us on Instagram and Tiktok, and join our Telegram channel for the latest updates.

SINGAPORE — To help Singaporeans who have difficulties coping during the Covid-19 pandemic, Nominated Member of Parliament (NMP) Walter Theseira has proposed that the Government set up a temporary universal basic income scheme. This will provide a weekly monetary payout to all Singaporeans for 12 weeks, or even longer, depending on the effects of the ongoing crisis.

Associate Professor Theseira, who is also an economics lecturer at the Singapore University of Social Sciences, said that a temporary increase in personal income taxes of Singaporeans would fund this scheme.

Speaking during the parliamentary debate on the Government’s support measures during this pandemic, Assoc Prof Theseira called on the public to “make a sacrifice”.

“If we truly believe we are only as strong as the weakest member of our society, we must be prepared to pay the price necessary to protect that fellow Singaporean,” he said on Tuesday (April 7).

The scheme, called Majulah Universal Basic Income (Mubi), was conceptualised with Dr Ong Qiyan from the Social Service Research Centre at the National University of Singapore.

While Deputy Prime Minister Heng Swee Keat had announced several support measures that would be of significant help to many Singaporeans — such as the one-off S$500 aid through the Temporary Relief Fund — Assoc Prof Theseira said that there is a real risk of Singaporeans falling through the gaps. This is because people can only qualify for some of these relief through means testing.

“That is why we must now consider shifting our approach from means testing and gatekeeping public support, to ensuring that all Singaporeans, on a universal basis, have some basic income necessary to provide for their families in the months ahead,” he said.

HOW THE SCHEME WORKS

The Mubi scheme aims to give all Singaporeans S$110 a week for 12 weeks, paid out through existing electronic payment channels.

The researchers derived the weekly amount of S$110 based on four expenditure categories from the national household expenditure survey.

The categories were:

  • Food and non-alcoholic beverages

  • Hawker centres, food courts, coffee shops, canteens, kiosks and street vendors

  • Utilities and other fuels

  • Telecommunications services

A Mubi payout of S$110 a week would be enough to cover the basic living expenses in these four categories in at least 60 per cent of all households, Assoc Prof Theseira said

The researchers did not include housing and medical expenses as these are already supported by other government schemes, he added.

Based on the researchers’ calculations, this scheme will cost S$4.62 billion if weekly payments are given out over 12 weeks.

These payouts would be recorded as personal income which will be taxable only in 2021.

“Hence, the scheme’s net benefit to each Singaporean will eventually depend on the recipient’s taxable income in 2020 and their tax rate,” Assoc Prof Theseira said.

To raise S$4.62 billion, a temporary personal income tax increase of 4.25 per cent for those earning more than S$20,000 annually would be required.

But the bottom half of all taxpayers is expected to benefit as the Mubi payout will be larger than their expected increase in taxes next year, he noted.

This will be especially so for taxpayers who suffer a sharp loss in income due to the Covid-19 crisis.

“In essence, Mubi will advance income from the future, when the economy and jobs are expected to recover, to the present, when it is needed the most… Through the tax system, more fortunate Singaporeans, who retain their earning capacity during the Covid-19 pandemic, will help less fortunate Singaporeans who suffer reductions in earnings,” he said.

Assoc Prof Theseira detailed several scenarios for how Mubi would work:

  • Low-income taxpayers, who earn about S$30,000 a year, will receive S$1,320 in payouts in 2020 and owe about S$200 more in taxes next year. So their net cash benefit would be S$1,120. 

  • Median-income taxpayers, who earn about S$58,000 a year, will receive S$100 more in Mubi cash payouts than taxes to be paid next year. 

  • High-income taxpayers will pay more in taxes next year than the Mubi cash payouts they receive. 

For households with dependents such as children, older parents and housewives, Assoc Prof Theseira said that Mubi would also benefit them because these individuals do not pay income tax but will also receive the payout.

A median-income taxpayer with two dependents would get nearly S$4,000 in Mubi payouts but only pay about S$1,200 in taxes next year, he pointed out.

Mubi would also give automatic insurance against unexpected drops in income.

“I know that asking Singaporeans to pay more taxes in the middle of a crisis may seem insensitive. But I’m asking those who are fortunate enough to retain their incomes, to pay more next year, to support those who cannot survive today,” Assoc Prof Theseira said.

EASIER NAVIGATION OF SCHEMES

Given the unpredictable nature of the coronavirus spread, Assoc Prof Theseira said that having a temporary universal basic income scheme will help give some assurance to Singaporeans, that they would have some income regardless of their circumstances.

“Incomes and jobs will be volatile over the next few months. A family that is financially secure today may not be next month.

“The certainty of having weekly payments to help put food on the table means that Singaporeans will never feel pressured to choose between feeding their family and protecting public health,” he added.

Such a scheme would also help policymakers and social service agencies save time and reduce resources in having to help Singaporeans navigate through different assistance schemes, he said.

With the severe economic impact of the Covid-19 crisis stretching social safety nets globally to breaking point, Assoc Prof Theseira reiterated the need for Singapore to move away from its usual way of providing relief through means testing.

It is expensive and also runs the risk of Singaporeans falling through the cracks, he added.

Given that it is impossible to predict which Singaporean will be the affected next by the pandemic, a universal basic income scheme such as Mubi will be able to cover basic daily living expenses.

“The Mubi scheme is also financed on the principle of solidarity, because all Singaporeans must face the Covid-19 pandemic together. Therefore, all Singaporean taxpayers are asked to contribute towards financing the scheme. Some will give more but all will give some,” Assoc Prof Theseira said. 

Deputy Prime Minister Heng Swee Keat in his round-up speech said that he fully supports the spirit of Assoc Prof Theseira’s suggestion. 

“Those who have more, should support those who have less. Such solidarity is especially needed in these difficult times,” he said. 

He also said that as mentioned in his ministerial statement, some of the support provided had to be broad-based so that “we can flow the support to our people quickly”.

“I encourage those who do not need the cash payouts to share it with those who need it more, by donating to Giving.sg or the Community Chest’s Courage Fund, or to directly share it with others,” Mr Heng, who is also Finance Minister, said.

Responding to Assoc Prof Theseira, Members of Parliament (MP) Lim Wee Kiak, Foo Mee Har, Louis Ng and Faisal Manap and Non-Constituency MP Dennis Tan — all of whom had asked if the Government could provide more cash in hand for different groups of Singaporeans and their families during this time — Mr Heng said that the Government was providing more than what they had proposed. 

He gave the example of a 50-year-old couple with a child below 20. They would receive S$3,200 under the various schemes. 

Low-wage workers on Workfare will receive an extra S$3,000 in cash to help them during this period. The Workfare scheme supplements eligible workers' income and retirement savings through cash payments and Central Provident Fund contributions, and helps those earning up to S$2,300 a month.

Related topics

universal basic income taxes income Covid-19 coronavirus

Read more of the latest in

Advertisement

Popular

Advertisement

Stay in the know. Anytime. Anywhere.

Subscribe to get daily news updates, insights and must reads delivered straight to your inbox.

By clicking subscribe, I agree for my personal data to be used to send me TODAY newsletters, promotional offers and for research and analysis.