Sunday, February 18, 2007

Whither the goodies?

The latest Singapore budget, announced by 2nd Minister for Finance, Tharman Shanmugaratnam, contains a lot of goodies for the low income worker and for businesses. But as usual, the middle-income earners get the the least even though, I must say, they probably are the cogs that keep the economic machinery well-oiled and running. It is not the government, stupid!

The press has gone to town praising the budget and businesses are over the moon in spite of the rise in the CPF contribution rates. Someone has rightly pointed out that the most anyone will get from this rise is $67.50 (i.e. 1.5% x $4,500, which is the income ceiling that will attract CPF contributions) - all of which must go into the enforced long term CPF deposit account. So for day to day expenses, there will be a net decrease in disposable income when the full effects of the 2% rise in GST kicks in. As I mentioned in an earlier blog entry, a 2% rise usually translates to a greater than 2% rise in prices. Did I hear GST credits? I don't know what form this rebate or credit is going to come to me. Outright cash in my bank, or will it be in the form of an income relief that I can claim when filing my income tax? If so, it may make little difference in reducing my personal income tax bill depending on whether the relief is offset before or after computation of the taxes. Good luck if you don't pay income tax at all (for whatever reason).

And worst if you are a middle-incomer who does not live in public housing. By the government's quirky measure of wealth, applied for the umpteenth year now, the budget has denied a substantial amount of the giveaways to this constituent of citizens although it now admits that people living in HDB Executive Apartments are also entitled to some rebates as those living in 1 - 5 room apartments. Why they didn't see this when I was living in one I will never understand. That was one of the reasons why I sold my EA and bought a condo. I wasn't getting ANY S&C rebates at all when I owned an EA. I should have waited longer for these people to make up their minds. This measure of wealth is, dare I say, so arbitrary.

So again, as in previous budgets, I get the least of the handouts because of the type of housing that I own and stay in. I am not so poor that I get the lion's share of the handouts nor am I rich enough to care about handouts at all. Sigh... and I wonder why people are rushing to buy the next condo property launch? Don't they realise that that will put them outside the bracket of people entitled to the most rebates and goodies come budget time? (But of course, many are speculators. For these people, there is a whole different set of logic that drives their often risky action). It has a feeling of "you're own your own, buddy", we hack care less for your votes come election time.

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