Taxes must rise for social spending to increase: Ng Eng Hen

Defence Minister Ng Eng Hen said the money needed for increased social spending can only come from taxes because Singapore's economy is not projected to grow significantly enough. (Yahoo! photo)

The money needed for increased social spending can only come from higher taxes, says Defence Minister Ng Eng Hen, reiterating a point made recently by Prime Minister Lee Hsien Loong.

Speaking on the sidelines of a forum on the prime minister’s National Day Rally speech on Thursday evening, Ng said Singapore’s ageing population necessitates higher social spending by the government.

He noted that by 2025, there will be roughly two to three working adults for every elderly person in Singapore. The Ministry for Community Development, Youth and Sports also estimates that by 2030, elderly people aged 65 and above will form almost one-quarter of Singapore's citizen population.

“Our society is ageing, we will have more aged people, and we want to take better care of the disadvantaged and disabled,” he told reporters. “Just by numbers alone, even if you spend the same amount, social spending has to increase.”

Responding to a question posed in the forum and addressing an audience of about 200, Ng said, “If you want more social spending, you have to find the money only from taxes.”

Lee had said in his speech on Sunday that taxes would have to be raised within the next two decades to fund higher social spending. He also explained that, though people have said the government could rely on reserves to finance the increase, it has already in a way been doing so through the use of returns from investing the reserves.

When asked by a forum participant about the possibility of using budget surpluses to fund the nation’s increments in social spending, Ng pointed out that the government does not have surpluses every year, noting that PM Lee had even mentioned in his rally that it took out S$8 billion from Singapore’s reserves in the last financial year.

“If our economy grows, if the size of the economy grows and revenues come in, then perhaps we don’t. But as you know, we have some limits of growth in terms of labour and our land, so our economy is projected to grow one to three per cent,” Ng added.

“But these are issues I think that are best dealt with when we need to, it’s just that we first have to determine the national conversation — how do we better take care of the disadvantaged groups... and then decide from there how much, what we need, what we can afford and how (we can) husband our resources to take better care of them. I think that’s a better conversation."