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SINGAPORE: Income inequality in Singapore fell to a record low in 2020 due to “massive transfers” and schemes leaned toward supporting lower-income groups, Deputy Prime Minister Heng Swee Keat said on Sunday (February 21) ).
Speaking about the CNA’s Ask the Finance Minister program, Heng said Singapore’s Gini coefficient was 0.375 in 2020 after government transfers, down from 0.398 in 2019. This is Singapore’s best performance since the government began tracking the data in 2000, he added.
“When we measured inequality last year, it was at an all-time low. That was due to massive transfers, because our schemes leaned towards supporting our lowest income group, ”Heng said at the post-budget forum, where he answered questions from Singaporeans.
On February 8, the Singapore Department of Statistics said that resident households received an average of S $ 6,308 per household member from various government schemes in 2020, which was higher than the S $ 4,684 received the previous year.
Responding to a question on Sunday about how he plans to cushion the knock-on effects of the impending Goods and Services Tax (GST) increase, Heng, who is also Minister of Finance, said that the S $ 6 billion Guarantee Package, which presented in the 2021 Budget, it will provide “very significant support” for households.
“For our lowest 20 percent of households, it is equivalent to not paying the increased GST for 10 years, and for the average (household) it is five years,” he added.
The Government initially announced in the 2018 Budget that it planned to increase the GST from 7 to 9 percent.
However, Heng said in last year’s budget that the GST rate would not apply in 2021, in light of the impact of COVID-19 on the economy.
READ: Emerging stronger from the COVID-19 crisis, the focus of Budget 2021
READ: What you need to know about Budget 2021
In this year’s budget speech, Heng said the increase will occur between 2022 and 2025, “sooner rather than later,” depending on the economic outlook.
“The GST is often seen as a regressive tax. But actually, if we look at the balance sheet of what people pay and what they receive, we have made it a very progressive system, ”Heng said during the forum.
In Singapore, the top 20% of households pay 56% of taxes but recoup 11% of profits. On the other hand, the bottom 20 percent of households pay 9 percent of the taxes but get 27 percent of the benefits, he added.
READ: Budget 2021: GST increase will occur between 2022 and 2025
“You can see how he is inclined to make the better off pay a lot more taxes and get fewer benefits. Those who are less well off pay much less in the form of taxes, but get many of the benefits. And in fact, many of our workers do not even pay personal income tax, ”Heng said.
“Our system has been designed over the years to tilt our support and provide greater support to those with the greatest needs.”
HOPE TO BALANCE THE BUDGET OVER THE NEXT FOUR TO FIVE YEARS: DPM HENG
In his budget address on February 16, Heng announced that all eligible households will receive a one-time special payment of between S $ 120-200 this year, as part of a S $ 900 million home support package for Singaporeans. .
The package includes an extension of a service and a reimbursement of conservation fees, a S $ 200 top-up on the corresponding education account for each child under 21, and Community Development Council (CDC) coupons worth S $ 100 for all Singapore households.
READ: Budget 2021: S $ 900 million home support package to help families with expenses
Low- and middle-income Singaporeans will also receive an additional one-time cash payment of S $ 200 under the GST coupon program.
Finance Minister Heng Swee Keat pictured with his guest panel on February 21 during Ask the Finance Minister 2021. (Photo: Marcus Mark Ramos)
Mr. Heng also announced that the Government will use its past reserves for the second consecutive year, with an expected deficit of S $ 11 billion for this Budget.
Responding to questions about the deficit, Heng said Sunday that it is a “very, very stressful time” as the world is in a severe recession and the road to recovery depends on the trajectory of the COVID-19 pandemic.
“But I still believe that with vaccination and with the progress that we are making, I think there is hope that we can recover, hopefully in 2021, but then beyond. Even then, it will take time for us to fully recover. That said, what we hope for the next four or five years is that we can still balance our budget during this term of government, “he added.
READ: Budget 2021: Expected deficit of S $ 11 billion; The government will draw on reserves for the second consecutive year
“If the recovery is what we expected, I think we have a good chance of balancing our budget. I would like to get back to a balanced budget because not only have we tapped into past reserves for two years in a row, but there has also been a lot of extraction from past reserves. So we have to think a lot about how we keep our reserves. “
SINGAPORE NEEDS TO PREPARE FOR THE UNEXPECTED
The key focus of this budget is on workers and incentivizing job growth, Mr. Heng said.
He responded to comments that budget announcements will help Singapore workers stay employed amid this crisis.
“We fully understand that if the breadwinner or sole breadwinner loses a job, not only he or she will be affected. But the whole family will be affected, “he added.
Noting the S $ 5.2 billion allocated to job growth, Heng said: “In the coming months and years, the economic environment will be different, jobs will change. Trends have accelerated, digitization is a good example.
“So how to help our workers get jobs or companies that are still hiring is an important part of this budget. And that, together with all the training schemes, will help our workers learn new skills to access new jobs ”.
READ: Budget 2021: SGUnited $ 5.4 billion boost to SGUnited to support the hiring of 200,000 stores
READ: Budget 2021: Extended employment support program for the most affected sectors as part of the S $ 11 billion package
Over the next five to 15 years, the pace of change will accelerate further and Singapore must prepare for the unexpected, Heng said in concluding.
“I believe that one of the things that we must be prepared for as individuals and as a country is that we must always be prepared for change, and we must always be prepared for surprises. Because if we can anticipate the great crisis to come, we can prevent it, “he added.
“But until now, I think humans haven’t had the ability to predict the future with such precision. So we must prepare for the future. “
See Ask the Finance Minister 2021 here:
