Budget 2008
Introduction
Recently, the Singapore government announced its budget for year 2008. Owing to a whopping Budget surplus of 6.4 billion, the government is able to share a portion of the Budget surplus with the Singapore citizens.
Reasons for Surplus
The huge surplus in Budget is largely due to the exceptionally buoyant property market last year. The price of residential housings rose by almost 30%, which is much higher that the initial forecasts of between 10-15% earlier in the year. The number of property transactions also rose by 60%, and other property-related revenues amount to $1.1 billion above initial projections. Hence, the strong local property market is a key factor that leads to the Budget surplus this year.
In addition, the total economic growth last year adds up to 7.7%, far exceeding the expected 4.5-6.5%. This strong economic growth also brought down unemployment rate by almost 2%. Hence, this increases the productive efficiency of our economy. Corporate and personal income taxes yielded an extra $1 billion for the economy, and the GST revenue also exceeded initial projections by $1.2 billion due to larger consumption rate.
Growth Dividends for Singaporeans
Owing to the huge Budget surplus, the government now has the capacity to share some of the surplus with Singaporeans. All adult Singaporeans will receive a one-off Growth Dividend package of between $100-$400m depending on their annual income and value of property they are living in. Elderly aged 60 and above will receive an extra $75-$200, while National Servicemen will receive an additional $100 each.
More figures can be found on http://www.mof.gov.sg/budget_2008/
All these growth dividends aim to help the people cope with the issue of inflation. With more benefits being distributed to the elderly and the needy, the government hopes to be able to lessen the strain of the recent GST hike on the poor.
Healthcare Benefits
Based on the new Budget report, people over the age of 51 will receive top-ups in their Medisave accounts by almost $450.
The government‘s move to top up the Medisave accounts of elderly is likely to cost the government about $220 million. This move aims to help combat higher MediShield Premiums as well as expected increases in health bills in the coming year.
Education Subsidies
Students from lower and middle income families will also receive more financial aid from the government in order to cushion higher tuition fees.
Details ca be found at http://www.mof.gov.sg/budget_2008/
Analysis of the Budget
This year’s Budget is mainly geared towards helping the people in the lower income groups. This is because these people are most badly hit by the rising cost of living as well as the GST hike. Hence, the government hopes to be able to help them tide over inflation by providing them with growth dividend handouts.
In addition, enough attention is also given to those from the middle income families. In the past, government policies generally focused more on helping those in the lower income group, and often neglect those belonging to the middle income group. Hence, these people do not receive sufficient help from the government. Neither do they have adequate means to live independently off the government, unlike those in the higher income group. However, this year’s Budget also reaches out to the people in the middle income group as well. Hence, Budget 2008 is a rather balanced one, seeing that many people (both rich and poor) benefited from it.
However, the disabled and those with special needs seem to be left out of this year’s Budget. No substantive tax or policy changes and extra incentives are being provided to them. However, the truth is that this particular group of people requires more help from the government, as their problems are magnified due to their disability. Hence, the Budget ought to pay more attention to them and offer them more help in tackling inflation.
-Xin Yu
posted by xinyu :) @ 8:15 PM
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