Thursday, 26 February 2015

Social Media takes on Budget 2015

‘Silver Surfer', you say? Singaporeans react to Budget 2015 on social media

The more than two-hour long speech delivered by Singapore’s Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam on Monday attracted a wide array of social media reactions, ranging from the witty to the wacky.

The minister tabled the country’s budget for 2015 in Parliament during which he spoke about various revisions made to several areas such as petrol duties, personal income tax rates for top earners as well as CPF contribution rates. Tharman also announced the introduction of various schemes, such as the Skills Future scheme, which aims to support Singaporeans in their lifelong learning, and the Silver Support Scheme, which aims to support the bottom 20 per cent of Singaporeans aged 65 and above. You may also visit our live blog for more information on the speech.

So what do some Singaporeans think of this year’s budget? Well, it really depends on what parts stood out for them.

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Budget 2015 not quite as rosy as made out to be

The cynical among us would see Budget 2015 as an extension of a vote-buying scheme from Budget 2014. The focus of 2014 was on the elderly through the Pioneer Generation Package, and 2015 saw a distinctive shift towards the middle-income wage earners. Some attention was paid on the Silver Support Scheme and levelling CPF contributions, but a lot more attention went towards tweaking policies for innovation and productivity, education for both the working group and children, transport cost and taxes – issues that concern the working folks.

By the pecking order of election goodies, the People’s Action Party government seems to be working its way through every sector of society, dishing out benefits to make, eventually, everyone happy. Or is it? It is important to note that Deputy Prime Minister and Minister for Finance Tharman Shanmugaratnam began delivering the Budget on one pretext: That Singapore will maintain its stand of encouraging self-reliance among citizens and fiscal prudence in government spending. Budget 2015 had been generous in hand-outs, but the conditions for their delivery remain the same – there is no free lunch, and citizens are expected to chip in.

In that perspective, if Budget 2015 had been an electioneering attempt, it would have failed, because while the items have the material of an “inclusive society”, the entire Budget does not have it in spirit.

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BUDGET 2015: WHAT IS RAISING THE CPF SALARY CEILING GOING TO “COST” YOU?

While many of you were hoping that the Budget 2015 speech would be filled with SG50 style freebies, Mr Tharman instead announced that the CPF Salary Ceiling would be raised to $6,000, and that contribution rates would be going up. Just in case it’s not clear, that means even more of your salary will be going into your CPF. Yes, it might be exactly THE OPPOSITE of what most people were hoping for.

But before you burst into tears of anger and resentment – Let’s break down what it actually means for you as a CPF member and then we can all commiserate over milk and cookies if need be.

What is the CPF Salary Ceiling? First, let’s look at what the CPF Salary Ceiling actually is. This is the maximum amount of monthly salary that determines CPF contribution. Right now, an employee’s CPF contribution is 20% of their salary and the CPF Salary Ceiling is $5,000. That means if you earn $5,000 or less, your contribution is 20% of that. If you earn more than $5,000 your contribution is STILL 20% of $5,000, or $1,000.

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TEN FUNDAMENTAL FLAWS OF 2015 PRE-ELECTION GOODIES BUDGET

Ten fundamental flaws of 2015 pre-election goodies budget:-

  1. GST rebates for the low-income and more for senior citizens aged above 55
  2. The government will halve the maid’s worker levy from $120 to $60 for those families helping the elderly and young children for a year starting from May 1.
  3. One-year road tax rebate of 20% for cars, 60% for motorcycles and 100% for light commercial car vehicles to offset higher petrol duties
  4. For workers aged 50-55, the CPF contribution rate will go up by 2 percentage points in 2016; 55-60 up 1 point, and 60-65 up 0.5 point.
  5. Waiver of exam fees in government schools
  6. Personal income tax rebate of 50% up to $1000 for YA 2015
  7. Income ceiling for CPF contributions will be raised from $5000 to $6000 – additional interest on retirement and medisave account
  8. SkillsFuture Credit of $500 for skills upgrading
  9. Wage credit for companies
  10. More taxes for the super-rich

related:
SINGAPORE UNVEILS ROBIN-HOOD BUDGET WITH BOOST TO TOP TAX RATE
INCREASED INCOME TAX FOR TOP 5% INCOME EARNERS
2014 BUDGET DEFICIT LIKELY TO BE $0.1B, DEFICIT IN 2015 FORECAST AT $6.7 B
WHAT IS RAISING THE CPF SALARY CEILING GOING TO “COST” YOU?

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WOMEN RIGHTS GROUP AWARE APPLAUDS BREAKTHROUGH BUDGET SPEECH
Statement by local non-government organisation, AWARE on the Budget 2015

The Association of Women for Action and Research (AWARE) applauds the emphasis on redistributive policies in the breakthrough Budget speech delivered by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam today. The DPM’s statement included a welcome commitment to the government’s redistributive role * with increased assistance for low *income groups supported by taxation of the top 5% earners.

“We are heartened by this recognition of the principles of collective responsibility, fairness and our duties to support one another as fellow citizens,” said Dr Vivienne Wee, AWARE’s Research and Advocacy Director.

“The government has done well to increase social spending as a percentage of GDP, and to recognise the obligation of those who have benefited the most from the economy to give more back.”

related:
TOP TEN FUNDAMENTAL FLAWS OF ELECTION BUDGET 2015
WHAT IS RAISING THE CPF SALARY CEILING GOING TO “COST” YOU?
I DONT WANT SKILLSFUTURE CREDIT, I ONLY WANT COLD HARD CASH
WOMEN RIGHTS GROUP APPLAUDS BREAKTHROUGH BUDGET SPEECH

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Budget 2015: A ‘heartless’ government?

1% extra on 1st $30,000 CPF from age 55 - According to the Budget 2015 speech – the CPF interest rate will be increased by one per cent on the first $30,000 for those aged 55 and above. This is $300 a year or a $40 increase in the monthly payout under CPF Life.

Robbed of billions and now give you peanuts? - So, after robbing us of an estimated $8 billion or more a year (difference between the actual returns on our CPF funds and the weighted average CPF interest rate) – we are now given an extra pittance of only $40 – which will only start from January 2016?

Silver Support of $100 to $250 - If you live in a HDB flat, have little family support and low CPF contributions in your working years – you can get $100 to $250 a month under the Silver Support Scheme. Since the criteria for ComCare financial assistance is similar but more stringent – does it mean that qualifying for Silver Support may preclude one from ComCare assistance which you may be receiving now?

related:
Budget 2015: A ‘heartless’ government?
COE revenue collections to hit $5.1 billion this FY
Budget 2015 is a Joke Book
Middle-income group on budget: More can be done

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Budget 2015 in bites


DPM Tharman: 2014 Budget expects a deficit of $0.1bil, down from $1.2bil. Overall inflation expected to be close to zero in 2015. DPM warns of stagnating income as economy advances and income rises. Median household income in Singapore has increased by 38% in past decade.

Four key areas for Budget 2015: Invest in skills of the future (meritocracy of skills); restructure economy and support next generation of business successes (innovation and productivity); invest in economic and social infrastructure; strengthen assurance in retirement. Five growth clusters of the future: Advanced engineering (e.g. robotics; healthcare cluster; smart and sustainable urban solutions;  logistics and aerospace (entrenching our status as a hub); Asian finance and wealth management.

DPM Tharman: Achieving deep skills requires more than programmes and government support. We also need a culture of continual learning, investment by employers, employee empowerment, and fostering a collaborative culture. An inclusive society will be achieved by building stronger social safety net: Enhancing CPF, build Silver Support scheme, and encourage spirit of philanthropy and giving.

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Winners and losers in Budget 2015
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam delivered his speech on Budget 2015 on Monday, and there were few surprises.

As expected, he talked about the Silver Support scheme for the low-income elderly, the enhancements to the Central Provident Fund System, handouts in the form of GST vouchers, and more help for SMEs. Perhaps the biggest surprise was the higher personal income tax rate for top earners.

Here’s a round-up of the key announcements based on the “winners” and “losers”:

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Budget 2015: A high earner example

Read some of the most inane comments which came with this item. To me Anthony Fok is quite clever. Prospective tutees will conclude this fellow must be very good at what he is teaching. ST just provided him free and the most credible advertising. What is paying more tax?

He is in a very sweet spot. The money folks are most allergic to taxes because it is the big killer for the magic of compounding returns. On the other hand this guy gladly and understandbly pays his share. Unfortunately many high income earners would really look askance at the additional 2% extra tax. The MOF must have worked the numbers and types that would be hit rigorously to be confident about this measure. Obviously the really rich do not so much raise their income as increase their wealth.

You see the government is careful to tax income and not wealth. Tax the latter and overnight you will have an exodus of the very rich out of here.

related: Budget 2015: Comparative wages

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Singapore Budget 2015: CPF enhancements

Yesterday’s Jubilee Budget Statement, delivered by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam, has included a number of significant changes to the Central Provident Fund (CPF) system.  In his address, the Minister set out new measures, building on the recent recommendations of the CPF Advisory Panel, aimed at giving people greater flexibility and security regarding their retirement savings and payouts.

The main changes include, raising the CPF salary ceiling to benefit the middle-income citizens, higher contribution rates for older workers and enhanced interest rates to aid those with lower balances.  In addition, the Silver Support Scheme will be strengthened to provide the lowest retiree income earners a “top up” each year as further support.

Neil Narale, Retirement Market Business Leader, ASEAN, Mercer, welcomes many of the proposed changes and feels the reforms will provide better support for different individuals with specific needs.  His thoughts on some of the key changes are set out below:

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The Budget – and my two cents worth

First, an announcement: Sin taxes have NOT been raised. I guess that’s a small reprieve for those who smoke and drink, especially those who are unhappy at not being able to drink in public places after-hours…There’s nothing on property either, so your home is safe.

Okay. That was just an attempt at light-heartedness.

So what is it about the Budget that will make anyone, including me, happy? I am UNhappy that my CPF contribution rate is going up, although the euphemism used is “normalised’’. Having enjoyed a little bit more take-home pay for a few months after turning 50, that little bit is going to go back into CPF. The plus point is that my employer also has to pay its 1 per cent portion. Yes, yes, I know all the big picture arguments about retirement adequacy…Still I was hoping that only the employer contribution rate went up, not mine!

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Budget 2015 provides safety net for those who need it most
AFP News/Theresa Barraclough - Singapore's marginal personal income tax rate for those earning above Sg$320,000 ($256,000) a year will rise to 22 percent next year from the current 20 percent, in order to fund rising social spending targeted at the poor and elderly

2015’s Budget has shown a willingness – albeit not a whole-hearted plunge – to move towards more redistributive policies. High income earners will have to pay more income tax, but low- and middle-income families will be receiving more support in the form of concessionary levies for foreign domestic workers, childcare subsidies, and the Silver Support Scheme that will help provide for low income earners who may not have substantial amounts of CPF monies for their retirement.

The significance of the Silver Support Scheme has not gone unnoticed. Shortly after Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam gave his Budget speech, AWARE released a press statement welcoming “the DPM’s explicit recognition of the position of homemakers and the insufficiency of CPF in providing for their needs. Silver Support will also assist those who participate in the economy without formal employment, such as freelancers and contract workers.”

This stands out for me, not because I’m a freelancer who might one day have to depend on the 2065 version of such a scheme, but because it is an acknowledgement that self-reliance is not always the answer, and that the state has a responsibility to provide a social safety net for those who have trouble being self-reliant.

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The New Standards For Poor

A day after the Budget was announced by Deputy Prime Minister Tharman Shanmugaratnam, S&P issued a top AAA unsolicited rating on Singapore. S&P noted that investments in the $68.2 billion budget - including efforts to boost innovation, skills training, as well as funding to meet the needs of Singapore's ageing population - "significantly outsized" the $705 million transferred to households. Investments such as the $26 billion for trains that keep breaking down, while $9.3 billion is allocated for hospital grants and construction, and suspect "Medishield Life subsidies".

What is also impossible to miss is that the $10.5 billion to be harvested from Goods and Services Tax (GST) is second only to the $13.5 billion contribution from corporate income taxes. Even the poorest of the poor, who are spared the $8.9 billion to be collected from personal income taxes, will have to pay 7 percent extra for the bread and water to survive on. Lest we forget, our water bill is doubly taxed, the GST is applied on top of the 30 percent "Water Conservation Tax".

As long as there is sheep to be fleeced from, Singapore is in no danger of going broke.

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The Singapore Daily
TOC: Budget 2015 not quite as rosy as made out to be
The Independent, SG: Singapore Budget 2015: CPF enhancements
TR Emeritus: Budget 2015: The Colour of Money
Money $mart: What is Raising the CPF Salary Ceiling Going to “Cost” You?
Bumble Bee Mum: Even SAHMs have things to cheer (and boo) about!
Zhun Bo, Singapore?!: Sandwiches of Singapore, rejoice!
Blogging for Myself: Budget 2015: A high earner example
Just Speaking My Mind: Singapore Budget 2015
Thoughts of a Cynical Investor: Budget: Ask in a very loud voice:
Singapore Notes: The New Standards For Poor
Today Voices: In support of tighter Town Councils Act

TR Emeritus: Budget 2015
mUmBRELLA: Jubilee budget welcome news for Sg marketing industry ‘produces
Bertha Harian: The Budget and my two cents worth
Kirsten Han: Budget 2015 provides safety net for those who need it most
Top of  Word: Little Evidence the Sg Budget can Help Address Future Challenges
Inve$tment Moat$: Income Ceiling Bump from 5k to 6k might put $94,000 at age 65
Blogging for Myself: Budget 2015: Upping income taxes
Epsilon Luxe: Welcoming the Budget 2015!!!
A Singaporean In Australia: Meritocracy of Skills
Zhun Bo, Singapore?!: The SG Budget 2015: Taking from rich; giving to poor
My Singapore News: A handout budget but something missing
Sg Beacon: `My-grandfather-grandmother-will-be-happy’: All The Good Stuff
Transitioning: Ten Fundamental Flaws of 2015 Pre-election Goodies Budget
Singapore Notes: How They Move Up And Do Well
Mothership: 6 Things in S’pore that Budget 2015 can help to fix
New Nation: No Budget goodies in 2015 Sg buying votes, elections only in 2016

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related:
#Sg Budget 2016
Social Media takes on Budget 2015
#SG Budget 2015
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Response To Budget 2013
Parliament Debates Budget 2013
Our SG Budget 2013