Representative image.
The Singapore government is perhaps the luckiest compared to other governments. This is because tough measures can be carried out openly, their rationale explained, and the public and other stakeholders able to accept them. The government has decided to raise the consumption tax by 1% from 7% to 8% starting in the new year.
The government had explained that it needed to do this to meet the financial burden on its citizens, as the aging population aged 65 and over is expected to account for a quarter of the city-state’s population. . In August, Deputy Prime Minister Lawrence Wong responded to opposition proposals to postpone the tax increase, saying that doing so would only increase the government’s burden.
Interestingly, Swedish furniture manufacturer IKEA initially promised to absorb the 1 percent increase in sales tax and not pass it on to customers. It is not clear how long this will be. FairPrice chain stores have promised to exempt 500 basic items from the consumption tax hike.
It is unusual for companies to protect buyers and would be unthinkable in other markets. The reason seems to be that the Singapore government keeps everyone updated on governance challenges.
The Goods and Services Tax (GST), which is levied across the board on everything from groceries to diamonds, has been raised to 9% as part of the government’s preparations to cover the financial burden of providing people’s pensions and healthcare. senior citizen.
Singapore has also been plagued by rising costs of living, with inflation rates rising from a fairly high 5.1% in January and February to 3.2% in November.
Although Singapore is a market economy, the government provides a cushion for the majority of its citizens by providing affordable housing, education, and health services that are partially paid for by the population. People are willing to pay for social security.
On another level, people are able to maximize their income and the quality of life is excellent. And a higher quality of life comes at a higher price.
In other words, the city is a combination of governments protecting people’s basic services while allowing markets with different incomes and living standards to play their part. The issue of inequality is not an issue, but the government is making sure that there is no deprivation or poverty.
This is no easy task. The ruling People’s Alliance Party, which has been in power for more than 60 years since Singapore’s founding, has strived to make Singapore a safe haven for living and development.
There was freedom to grow and expand, and political freedom also increased.
However, the ruling party has good governance and good budget control, as evidenced by the lack of absolute poverty in the city.
And governments have taken upon themselves the responsibility of providing for their citizens in retirement, constantly anticipating future needs. This tax increase is intended to finance the period from 2030 onwards, when demographic changes will significantly increase the proportion of elderly and retired people, and the government’s social security spending will increase.
Singapore also needs to consider how many people it can accommodate and how many people it needs to maintain a vibrant market economy.