MPs train guns on govt over fast-rising costs

Businesses feeling big pinch, they say; some want GST rolled back to 5%

RISING business costs - and the alleged failure of the government to tackle them in its latest Budget - was the recurring theme yesterday when Members of Parliament kicked off the debate on the Budget Statement.

Inflation and the unexpected huge Budget surplus were also on the lips of most of the 18 MPs who spoke, with quite a number of them taking the government to task for raising the Goods and Services Tax (GST) - and adding to the cost burden of businesses and consumers.

A few, like Jessica Tan (East Coast), also picked on the government for virtually ignoring the green issue in its Budget - there are no incentives for businesses to adopt environment-friendly practices

Leading the charge on the cost issue was Inderjit Singh (Ang Mo Kio). He praised the Budget as visionary and for containing measures that will sustain growth, but said it ‘missed addressing a very significant issue of rapidly rising costs’.

‘This is the biggest problem for our businesses today, beyond anything they could have planned for,’ according to him. ‘Unless they survive the current cost increases, they might not have the stamina to benefit from the longer-term incentives for innovation announced by the (finance) minister.’

Mr Singh blamed the government for contributing to the problem. The ‘grow-as-fast-as-you-can policy’ of the government has led to economic overheating, he said.

‘The huge stimulus to the economy provided by the decision to build two integrated resorts (IRs) at one go instead of one at a time, as well as the huge transport infrastructure programmes ongoing and to come - these problems, which were in hiatus during lean years, caused further overheating.’

Even workers are concerned about escalating business costs, according to Heng Chee How (Jalan Besar).

‘They hear from their companies worries about rising office rents, energy prices, raw material costs and so on,’ he said. ‘These may impact negatively on their earnings eventually.’

Both Amy Khor (Hong Kah) and Michael Palmer (Pasir Ris-Punggol) zeroed in on office rents and occupancy costs of commercial and industrial premises - and urged the government to provide temporary tax relief and rebates for property tax.

Mr Palmer also thinks the government, given its huge surplus, can afford to give Singaporeans ‘a little more help’ by way of direct assistance to soften the impact of the rising cost of living.

‘We need to keep a close watch on the situation on the ground,’ he said. ‘Of the $6.45 billion surplus, we should earmark and set aside enough for a contingency fund to provide inflation relief packages, similar to the GST Offset Package, as and when required.’

But others cautioned against handing out too many ‘hong baos’ and breeding unhealthy expectations.

‘I am worried if people are beginning to take hong baos for granted,’ said Baey Yam Keng (Tanjong Pagar). ‘If people just look at the dollar figure they receive, rejoice when it is more than last year’s and become disappointed if it is a smaller windfall.’

Still, others like Christopher De Souza (Holland-Bukit Timah) feel surpluses could be spent in a way to ‘achieve a better and more equitable distribution of the nation’s wealth without discarding the tenets of Workfare and meritocracy’.

He suggested raising the income ceiling for first-time buyers of subsidised public housing, spending more in beautifying common spaces and tying the Workfare Income Supplement Scheme to inflation.

Opposition MP Low Thia Khiang questioned the government’s budgetary credibility after its forecast of a $700 million deficit turned out to be a $6.4 billion surplus - and he wants to government to withdraw the 2 percentage point GST hike.

Nominated MP Gautam Banerjee, who also thinks the government did a shoddy job of Budget forecasting, called on it ‘to reduce GST back to 5 per cent’.

Nominated MP Eunice Olsen and Mr Singh feel the government may have been too hasty in raising the GST.

‘In light of the booming economy, which should have been visible by mid-2007, the government could have made the late decision to hold off the GST rise by a year or two,’ Mr Singh said.

Source : Business Times - 26 Feb 2008