Interesting key features from Singapore Second Finance Minister Tharman Shanmugaratnam when presenting the 2007/2008 budget:

• the plans to raise the country’s goods and services tax (GST) to 7% from 5% from July 1 and cut corporate tax by 2 percentage points to 18% next year.
• the GST increase will be used to redistribute wealth to address dramatic income disparities in the country of 4.5 million people, while the corporate tax cut aims to bolster Singapore’s status as a key business centre in competition with rivals such as Hong Kong.
• the key item on the budget agenda was to narrow the country’s income gap. ( Incidentally, Singapore is the wealthiest country in Asia after Japan in terms of gross national income per head. But in terms of income inequality Singapore ranks alongside countries such as Burundi and Kenya, the UN Human Development Report 2006 shows.
• The 2006/7 budget deficit was much smaller than the S$2.9 billion that had been initially set a year ago, thanks to surprisingly strong economic growth in 2006.
• Last year’s gross domestic product rose 7.9% partly as growth, long reliant on exports, picked up in domestic sectors.
• Overall, Singapore economy should grow by a healthy 4.5% to 6.5% this year, riding on the momentum of strong growth in the last three years

The following are some measures to narrow the income gap:

• Raising employer contributions to the country’s pension scheme by 1.5 percentage points to 14.5% from July
• ‘Workfare’ income support will target full-time workers aged above 45 years earning S$1,000 a month (RM2,279) or less. It will supplement their wages by up to S$1,200 per year, or between 10% to 20% of their pay.
• Some S$1.8 billion will be given out as cash in the form of GST credits. Nearly three-quarters of the population will receive S$800, paid out in S$200 per year.
• Spending on the social safety net would translate into a budget deficit of S$700 million for the fiscal year that starts on April 1, narrower than a deficit of S$1.3 billion in the fiscal year to the end of March.
  (The Edge 15/2/07)

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