Difficult Choices that Singaporeans cannot outsource to the Government

As the elections in 2015 closes, Singaporeans are starting to share their views more aggressively. Dormant political parties have also re-surfaced to share their party’s stances on national level policies.

The path towards growth is a straight forward one. There are only 3 factors to balance: 1. taxes, 2. wages and profit and, 3. subsidies. The size of our tax base is a function of wages earned by workers in Singapore and profits collected by business entities. Subsidies are simply put, negative cash outflow.

If we want to sustain our tax base for national growth without increasing tax rates, we must create better jobs, have more profitable firms in Singapore and be more prudent with introducing subsidies. We cannot create better jobs and grow businesses without managing scarcity of resources and adopting a more open immigration policy.

We have a dangerously low birth replacement ratio which cannot be addressed simply by offering women more child birth subsidies. Highly qualified women have the right to decide to focus on their careers. This trend will continue to erode our tax base. Instead of acknowledging some of these pressing issues, some political parties in Singapore have simply advocated for more social policies. They want more subsidies in areas such as healthcare, transport and retirement. But they also want the incumbent government not to raise tax. Their basis: the Singapore government has a lot of money in their reserves.

I find these policies regressive. I acknowledge that Singapore has to offer subsidies to some groups of low income earners. I also recognise that the definition of the underprivileged group may have to broaden overtime. But we have to do it carefully. After all, an increase in subsidies leads to higher economic burden for a nation. So we must set basic rules and principles for such definition.

Unfortunately, some Singaporeans may have fell for the sweet promises of more subsidies, greater government expenditure and a more manageable population, without a corresponding increase in tax. Singaporeans must decide for themselves, if they should face the hard facts or believe those who simply promise the sky.