Quora Answer: Did Budget 2022 Adequately Address Restructuring Anxieties in Singapore Felt by Workers & Firms?

The following is my answer to a Quora question: “Did Budget 2022 adequately address restructuring anxieties in Singapore felt by workers and firms?” 

It is a bit early to say since we have not seen the effects of it yet.  However, it looks like a step in the right direction.  There are three major areas of interest in the entire budget that Singaporeans should pay attention, since they have major ramifications over the next few years. 

One of central tenets if the expansion of the progressive wage model, which aims to uplift workers in the industries such as security and cleaning.  This applies to those earning at the 20^th percentile or below.  This is essentially a minimum wage, which is necessary to bridge the wage gap and prevent the growth of a disenfranchised underclass.  Due to the pandemic, the timeline of implementation was accelerated and expanded to other industries such as waste management and retail. 

The second was the increase in GST, which is staggered over the next three years.  The increase to 9% is actually lower than the expected 11%.  As a consumption tax, it is among the lowest in the developed world, but it was inevitable.  The key driver for the increase in GST is the cost of an ageing demographic.  The population of Singapore is ageing.  There is a cost to maintaining the standard of living with a lower tax base, and that money has to come from somewhere.  A consumption tax is one of the more equitable solutions. 

The third is the shifting of the tax burden to the wealthier section of the populace.  This can be seen in the increase in property tax, and discretionary luxury spending, and in the increase in income tax for the highest bracket.  Singapore has also implemented a 15% minimum corporate tax, in line with the rest of the world. 

Overall, it is a progressive budget, an expansionary one.  We are drawing $6 billion from the Reserves, which has to be paid back eventually.  This budget touches a bit on climate change and carbon credits.  The focus was on restructuring the economy, and close the income gap.  The next budget would be expected to build on this and address further infrastructural challenges of climate change.