Middle Income Group Not Left Out In Budget 2014
25 Feb 2014, 1.54PM
Over the last three to four years, there has been a big shift in the Budgets with increases in grants and subsidies to the middle income. This group today receives 2.5 times more than it did 10 years ago, said Finance Minister Tharman Shanmugaratnam during a Channel NewsAsia's Budget forum "Ask the Finance Minister" on Monday (24 Feb). The goal is to achieve a fair and equitable society, he said.
He noted that the middle income:
• Received more subsidies in education, housing and health.
• Pay lower taxes than counterparts in other countries, except Hong Kong.
• Received significant real wage increases over the years.
The challenge for the Government is to contain the cost of living and to ensure the economy remains dynamic enough to provide enough jobs.
Acknowledging that Singapore's Gini coefficient has fallen, indicating a drop in income inequality which the Minister said is due to shifts in government policies, he stressed that the real challenge is to reduce inequality in a way consistent with raising income as income inequality is typically highest in cities that people want to live in, and lowest in cities with stagnant incomes.
“The real challenge isn't to get Gini down, but our real challenge is to uplift everyone so they can achieve their full potential and contribute to a better society. You may start off poor but we will give you ample support to do well in life and for your children to do well in life. So you mustn't just think about relativities but about absolutes -- people's standard of living must go up,” added Mr Tharman.
Read the Straits Times article below and the Channel News Asia article “Pioneer Generation Package will not affect future Budgets: Tharman” for more information.
What do you think of the increased support for middle income Singaporeans?
Employers’ CPF Contribution to go up by 1 % With Increase Channelled into Medisave
23 Feb 2014, 1.29PM
From January 2015, the employers’ CPF contribution rate will be raised by 1 percentage point for all employees with the entire increase going into their Medisave accounts. This was among the measures announced in Budget 2014 to enhance healthcare affordability for Singaporeans
The increase will bring the overall CPF contribution rate to 37%, with employers contributing 17 percentage points and employees 20 percentage points
To help employers manage this increase, the Government will introduce a one-year Temporary Employment Credit (TEC) to provide employers with an offset of 0.5 percentage points of wages, up to the CPF salary ceiling of $5,000. The TEC will cost $330 million.
Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said that the move will significantly benefit both young and middle-aged workers. For example, a 40-year-old earning a wage of $4,000 will increase his Medisave savings by $20,800 by the time he retires at age 65.
He added that the move was considered carefully and took into account future needs. “Compared to a decade ago, life expectancy has increased and will very likely move up further in Singapore. The demand for healthcare services has also increased as advancements in medical care become available,” Mr Tharman said.
Share your views on the increase in CPF Medisave contribution. How will it impact employers and workers?
More Support to Help with Cost of Living
Lower- and Middle-income students can now look forward to more Government subsidies, both at pre-schools and at our institutes of higher learning (IHLs).
Pre-school Education
The Government will also enhance bursaries at IHLs through the following changes which are expected to cost up to $147 million more each year:
How will the enhancements to pre-school subsidies and IHL bursaries improve the social mobility of students from lower and middle-income families?
Pre-school Education
- More assistance will be provided through the Kindergarten Fee Assistance Scheme (KiFAS). The scheme will also be extended to the middle income group.
- This will enable households in the lowest quartile, earning up to $3,000 a month, to pay just $3 a month, down from as much as $75 previously. Lower-middle households earning $4,800 a month will now pay $85 a month, compared to $130.
- KiFAS will also be extended to all Anchor Operators and MOE Kindergartens.
The Government will also enhance bursaries at IHLs through the following changes which are expected to cost up to $147 million more each year:
- The per capita monthly household income criteria for bursaries will be raised from $1,700 to $1,900, benefitting students from two-thirds of all Singaporean households.
- University undergraduates from the lowest one-third of households will see bursaries increase to $3,600 a year. Middle-income students will see an increase of $450 to $2,600 a year. This is in addition to the Tuition Fee Loan and Study Loan schemes that enable students to pay for their university education interest-free while they are studying.
- Polytechnic and ITE students from middle-income households will receive increased support. ITE bursaries for lower-income students will also be significantly higher than their fees, helping them defray their living expenses.
How will the enhancements to pre-school subsidies and IHL bursaries improve the social mobility of students from lower and middle-income families?
Additional support will be given to Singaporean households to help them with their costs of living, especially the lower-income and retirees. Income tax relief will also be enhanced for individuals supporting their parents and grandparents.
i) GST Voucher – Cash: Seniors’ Bonus
Eligible Singaporean seniors will be given a special GST Voucher – Cash: Seniors’ Bonus, effectively doubling the GST Voucher – Cash, which they usually receive.
i) GST Voucher – Cash: Seniors’ Bonus
Eligible Singaporean seniors will be given a special GST Voucher – Cash: Seniors’ Bonus, effectively doubling the GST Voucher – Cash, which they usually receive.
This will help to offset some of their daily expenses, particularly retirees with little or no income. About 675,000 Singaporeans aged 55 and above in 2014 will benefit from this.
ii) One-off GST Voucher – U Save Special Payment
The Government will provide a one-off GST Voucher – U Save Special Payment, with those in smaller flats receiving larger rebate amounts.
Through these additional rebates, some 800,000 eligible HDB households may free up cash for other expenses.
iii) One-off Service and Conservancy Charges (S&CC)
The Government will also provide 1 to 3 months of Service and Conservancy Charges (S&CC) rebates:
Parent relief and handicapped parent relief will be increased by up to $3,000, with those individuals who are staying with their elderly dependants enjoying a higher relief quantum.
Sharing of parent relief will now be allowed, in recognition that care for parents is a shared responsibility among family members. Currently, the relief for a parent can only be claimed by one child.
ii) One-off GST Voucher – U Save Special Payment
The Government will provide a one-off GST Voucher – U Save Special Payment, with those in smaller flats receiving larger rebate amounts.
Through these additional rebates, some 800,000 eligible HDB households may free up cash for other expenses.
iii) One-off Service and Conservancy Charges (S&CC)
The Government will also provide 1 to 3 months of Service and Conservancy Charges (S&CC) rebates:
iv) Enhancement of Parent Relief
Income tax relief will also be enhanced to greater encourage and recognise individuals supporting their parents and grandparents.
Parent relief and handicapped parent relief will be increased by up to $3,000, with those individuals who are staying with their elderly dependants enjoying a higher relief quantum.
Sharing of parent relief will now be allowed, in recognition that care for parents is a shared responsibility among family members. Currently, the relief for a parent can only be claimed by one child.
This will benefit about 170,000 individuals, supporting 208,000 dependants.
What are your views on the additional support for Singaporean households? Share your views here!
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