Skip to main content

New! You can personalise your feed. Try it now

Advertisement

Advertisement

Tax burden on middle-income group caring for children, elderly parents lower than in most cities: Lawrence Wong

SINGAPORE — In drawing up this year’s Budget, the Government was mindful of the pressures faced by the "sandwich" middle-income group, who look after their children and elderly parents, and therefore expanded support in areas such as education and healthcare, Finance Minister Lawrence Wong said on Wednesday (March 2).

Finance Minister Lawrence Wong said the Government had been mindful of the challenges faced by Singaporeans in the "sandwich" middle-income group responsible for the care of both their children and elderly parents.
Finance Minister Lawrence Wong said the Government had been mindful of the challenges faced by Singaporeans in the "sandwich" middle-income group responsible for the care of both their children and elderly parents.
Follow TODAY on WhatsApp
  • Finance Minister Lawrence Wong wrapped up three days of Budget debates on Wednesday in a speech of about 1.5 hours
  • He addressed a range of issues raised by Members of Parliament
  • This included concerns that not enough was being done for the middle-income group caring for both children and elderly parents
  • Mr Wong said the Government was mindful of the pressures this "sandwich" group faced and had designed policies to address them
  • He added that as the wealthy consume more, it would not make sense to do away with consumption taxes

SINGAPORE — In drawing up this year’s Budget, the Government was mindful of the pressures faced by the "sandwich" middle-income group who look after their children and elderly parents, and therefore expanded support in areas such as education and healthcare, Finance Minister Lawrence Wong said on Wednesday (March 2).

“In fact, their tax burden is significantly lower than what it is for their equivalent in most other cities,” said Mr Wong, as he wrapped up three days of debate over the Budget in a speech of about 1.5 hours. The Budget was formally approved by Parliament after his speech.

He added that for the relatively low amount of taxes this sandwich generation pays, they get to “enjoy many benefits in Singapore: Affordable public housing and healthcare, beautiful parks, excellent infrastructure, quality pre-schools, schools and tertiary institutions with highly subsidised fees”.

During the debate, some Members of Parliament (MPs) had raised concerns about whether the Government was doing enough for the sandwich middle-income group.

Mr Wong said those in the 40th to 60th percentile of household incomes, that is the middle 20 per cent, receive more benefits than the taxes they pay.

As for those in the 60th to 90th percentile of household incomes, he said they pay “some taxes” after subtracting the subsidies and transfers they receive.

Our tax system must never discourage hard work, effort and enterprise. At the same time, we want to avoid in Singapore the emergence of stark income inequalities or social stratifications, which will undermine social cohesion and pull us apart.
Finance Minister Lawrence Wong

“I understand the pressures faced by this (sandwich) group. Some are caregivers who bear a heavy burden financially, emotionally and even physically. This is why we have been mindful to make sure we expand our suite of broad-based support in areas like education and healthcare.”

Moreover, the Government has also increased healthcare and caregiving-related subsidies and support to relieve the load on these families, especially for those who care for both the young and the old, he said.

Mr Wong said overall, Singapore’s system of taxes and benefits continues to be fair and highly progressive, and explained his reasons why a hike in the Goods and Services Tax (GST) is necessary.

“Everyone contributes towards the cost of delivering services, and everyone benefits from these services, but to different degrees,” he said.

“Those with greater means bear a higher burden, and they draw less on Government support — but they still enjoy some benefits…Those with fewer means carry a lighter share, but they still contribute something, and in return they receive more benefits from the Government. More than they put in, and more than the better off.”

THE WEALTHY CONTRIBUTE IN OTHER WAYS

On suggestions by the Workers’ Party (WP) to introduce a net wealth tax, Mr Wong said that as much as the Government would like to do so in theory, it is challenging to do in practice.

“Many forms of wealth are mobile. As long as there are differences in wealth taxes across jurisdictions, wealth can and will move,” he said.

In any case, he added that the well-to-do contribute in many ways, and not just through income or wealth taxes.

For example, he said many have set up businesses in Singapore, “creating good jobs for Singaporeans” and helping to develop new capabilities in our economy.

Some also set up philanthropic foundations and contribute to charities, added Mr Wong.

Many forms of wealth are mobile. As long as there are differences in wealth taxes across jurisdictions, wealth can and will move.
Finance Minister Lawrence Wong on why introducing a net wealth tax is problematic

But more importantly, he highlighted that while these individuals are in Singapore, they also “consume more and pay more in GST”.

As such, suggestions to ignore consumption taxes would not be feasible as well. The GST is a consumption tax.

“A consumption tax also allows us to tax those who may not be earning income in Singapore, but are in fact, well off,” said Mr Wong.

Such individuals may be investors or other individuals with means — such as the self-employed whose income is not easily ascertained.

“They will certainly be consuming more, and the GST ensures…those who have greater means will contribute their fair share of taxes.”

Still, Mr Wong said he wanted to make it clear that the Government has no issue with people doing well, and neither did he want to create a society where the bulk of the tax system is borne by a small group of wealthy people.

“Our tax system must never discourage hard work, effort and enterprise. At the same time, we want to avoid in Singapore the emergence of stark income inequalities or social stratifications, which will undermine social cohesion and pull us apart.”

Mr Wong said Singapore’s system of taxes and transfer will be continually reviewed to “reward enterprise, innovation and work, and to mitigate the pressures of social inequalities”.

In spite of the explanations put forth by Mr Wong, the Leader of the Opposition Pritam Singh called for a vote to put on record his dissent to the Budget, which was ultimately approved by Parliament.

Aside from Mr Singh and his fellow WP members, Non-constituency Members of Parliament Hazel Poa and Mr Leong Mun Wai of the Progress Singapore Party similarly stood up to place their objections to the Budget on record.

Mr Singh said WP members Sylvia Lim, He Ting Ru and Louis Chua were not present in Parliament as they had to self-isolate, but that they took the same position as the party.

However, Speaker of the Parliament Tan Chuan-Jin said they needed to be present physically to record their objections, a point noted by Mr Singh.

ADDRESSING BURNOUT, REOPENING SINGAPORE, FIGHTING POVERTY

Earlier on Wednesday, seven MPs and a Nominated Member of Parliament (NMP) took turns during the debate on the Budget to address the House on a range of issues faced by Singaporeans.

Ms Carrie Tan, MP for Nee Soon Group Representation Constituency (GRC), drew attention to the burnout experienced by care workers here — such as social workers, healthcare professionals and teachers — and called for more resources to ensure that they are adequately compensated, with enough capacity to handle the workload.

She also spoke about teachers who double as counsellors in schools, cautioning that they may not have “sufficient bandwidth and emotional capacity” to fulfil the double role effectively.

“The mental health of our teachers is next on the line if we continue to load them with too many expectations,” she said.

Mr Vikram Nair, MP for Sembawang GRC, citing his experience being infected with Covid-19 overseas recently, urged the Government to continue moving forward with plans to ease infection control restrictions, while taking special care to protect more vulnerable groups.

Moving on to housing issues, he also proposed that the Government consider removing the minimum occupancy period, at least for resale flats, to relieve supply-side pressures in a bid to make public housing more affordable.

“This would create a greater supply of resale flats which should ease their prices,” he said, while adding that existing disincentives such as the seller’s stamp duty would help deter would-be house flippers or speculators.

Mr Leon Perera, MP for Aljunied GRC, urged the Government to invest more in fighting poverty and early intervention for poor children. He argued that such efforts “may reduce the incidence of persons needing social welfare support in future” while unlocking talent and potential growth for the economy.

“Most importantly of all, a war on poverty would strengthen the foundations of social solidarity in our nation and help realise the promise that we truly have everyone’s back,” he said.

Acknowledging existing support schemes, he urged the Government to improve accessibility, such as by doing away with its “kueh lapis” of multiple lines of assistance, which imposes more burden on the beneficiaries seeking help.

Ms Joan Pereira of Tanjong Pagar GRC touched on the preservation of Singapore’s hawker heritage, proposing that authorities pay for and facilitate the passing down of culinary techniques and recipes from veteran hawkers to young apprentices.

“In turn, the apprentice could be bonded to the stall for a period of say, three years, for example; if I may say so, similar to a government scholarship with a bond,” she added.

Ms Rahayu Mahzam, Parliamentary Secretary for the Ministry of Health, called for more assistance for families with children with special needs and support for youths.

Sports sector NMP Mark Chay urged a relook at Covid-19 safety management measures for sports vendors to ensure they can operate efficiently and sustainably.

Related topics

Budget 2022 GST hike Lawrence Wong sandwich taxation

Read more of the latest in

Advertisement

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.