Singapore’s income tax system can be changed to place a larger burden on the rich than what has been proposed, said Workers’ Party (WP) chairman Sylvia Lim.
Speaking on the opening day of the Budget debate in Parliament on Tuesday, Lim argued that there is room for greater differentiation in the existing tax system, as the threshold that exceeds the current maximum bracket of $320,000 in annual income includes a wide range of professions, from university professors to bankers who earn in the range of millions of dollars annually.
“I believe Singaporeans on the whole see the wisdom and need for this (more progressiveness), including those who are better off,” she said. “There should be a fair contribution towards our fellow citizens and to the country as a whole.”
Currently, any income earner in Singapore who earns more than $320,000 per year pays a flat rate of 20 per cent in taxes.
In her speech, the Aljunied Member of Parliament proposed adding more tiers to income earners who fall above the $320,000 mark — for those earning between $500,000 and $700,000 to be taxed 22 per cent, between $700,000 to $1 million 24 per cent and for earners above the $1 million mark, 25 per cent.
“Even at a maximum income tax rate of say 25 per cent, such a top rate would still be low globally,” she noted. “While some may argue that such a move might reduce our attractiveness as a destination to high-earners, I believe Singapore would still have major selling points to them, such as the ease of doing business and low corporate tax rates.”
Review rental housing rates: Png
Also speaking on Tuesday was Hougang single member constituency MP Png Eng Huat, who suggested measures to further lower the current burden that exists on lower-income workers.
Png spoke about the cost of food and rental housing, as well as the potential effectiveness of the changes to the Workfare Income Supplement (WIS) and the new Wage Credit Scheme.
Under the revised employee CPF contribution rates, Png noted that low wage workers will see their take-home pay shrink, and the increments in Workfare payouts will still result in a very marginal rise in overall take-home pay. Factoring in an average 2 to 3 per cent of core inflation for this year, the additional amount is “as good as gone”, he added.
“Although there are measures like GST vouchers and S&CC (Service and Conservancy charges) rebates to help Singaporean families cope with rising cost of living, having some cash at hand before the next pay day comes is what low income families would welcome more,” said Png, calling for a further increment of WIS cash payouts to 50 per cent instead of the revised 40 per cent.
Turning to rental housing, Png noted that higher wages for some low-income workers would mean higher rent. The rent for occupants of one-room flats would increase from $33 to $90 per month, a close to 300 per cent jump when a worker’s salary crosses the $800 mark, he pointed out.
Png also said the net increase in a low-wage worker’s take-home pay from National Wage Council guidelines will not be sufficient to service his revised rental.
After factoring in the increased CPF contribution rate (from 17 to 20 per cent), a higher WIS payout and the subsequent increment in rental, Png said a worker in this situation “is better off” without the NWC’s recommended wage increase since he will actually end up poorer.
“’What the left hand giveth, the right hand taketh away’ is probably what some of them will feel,” said Png, urging the National Development Ministry (MND) to look into devising “more reasonable” rental tiers to better assist low-wage workers.
Png also called on the National Environment Agency to strive to keep hawker stall rental “reasonable” and “subsidised”, in order to keep food prices more affordable. He suggested a fixed rental of $320 a month for new stalls in the nine upcoming planned hawker centres that were announced by the MND in 2011, in order to “create jobs, keep hawker food affordable and ensure Singaporeans, young or old, remain economically active”.
“This is the least the government can do for these Singaporeans to make up for those lost years of their working lives earning meagre salaries while helping Singapore to grow,” he said.
Additional reporting by Shah Salimat