It was with much amusement when I was immersed in Singapore last week about the raging debate over taxes and subsidies that people there complain to their government. These were the same hotly debated issues among officials of the Philippine government weeks before I left Manila for Singapore. This only goes to show that rich and poor countries are all affected by the prevailing global economic difficulties which governments around the world are trying to ease — the impact of the rising cost of oil and food to their respective peoples.
But in a strongman-ruled government like Singapore, economic problems largely caused by global factors are much more capably handled by its centrally planned economy. In his message during their National Day celebration that I attended over the weekend, Prime Minister Lee Hsien Loong admitted things would get worse before they get any better due to this global economic crunch.
In our regular breakfast meeting of the Tuesday Club at the EDSA Shangri-La yesterday, Department of Education Secretary Jesli Lapus told me that he, too, was in Singapore recently on official mission. Lapus led the delegation who represented our government in the Philippine Independence Day rites on June 12.
The occasion was capped by the unveiling of a bronze bust of our national hero, Dr. Jose Rizal, dubbed as “the pride of Malayan race” whose writings led to a revolution that established the first republic in Asia. Lapus and Singapore President S.R. Nathan unveiled the bust at the Asian Civilization Museum Green. It did not surprise me, though, that Singaporeans have fond memories of Dr. Rizal. Like the Philippines, Singapore has rich Malayan heritage. The city-state, carved out of mainland Malaysia, has four large ethnic groupings — Malay, Chinese, Bombay, and Eurasians (or local Singaporeans married to British and other European nationalities). But the national anthem of Singapore is in Malay language while English is their official language.
The bronze bust of Dr. Rizal stands right at the heart of the bustling city-state of Singapore which gave this honor to our country’s national hero. It was only the third monument for a foreigner to be accorded such honor in Singapore. From official records, Lapus disclosed he found out that Rizal visited Singapore five times during his frequent travels abroad. This was during the late 19th century when Singapore was a quaint, English colony which greatly attracted the peripatetic Filipino nationalist. A century later, Dr. Rizal’s memories are immortalized in this now ultra-modern country.
The Rizal marker that is now proudly erected in Singapore, Lapus noted, signals to the world the strong links between our peoples through the centuries and both are committed to forging even deeper ties of friendship, understanding and cooperation. The installation of the Rizal bust kicked off the activities lined up by the Philippines and Singapore to mark the 40th anniversary next year of the establishment of diplomatic relations between the two countries.
Reeling under the impact of the rising global oil and food prices, both governments are obviously applying more or less the same tax and subsidy strategies to protect the economies of their respective countries.
Singaporean Finance Minister Tharman Shanmugaratnam told us they raised the goods and services tax (GST) from five percent last year to seven percent this year. The GST in Singapore is the counterpart of our value added tax (VAT). The other controversial tax measure in Singapore is their so-called Electronic Road Pricing (ERP) for short. Singaporeans who want to avoid heavy traffic have to pay for the usage of road. Only those with ERP gadgets installed in their vehicles can pass these roads that are equipped with overhead gantries through which the pre-paid road taxes are charged electronically.
Recognizing this higher GST rate and the ERP are added economic burdens to Singaporeans. Tharman stressed their government are finding ways to give back to their people the benefits of taxes they pay, especially to help them cope with the global trend of rising oil and food prices.
Tharman disclosed they implemented this year a new subsidy program dubbed as “Work-fare,” derived from the word “welfare.” Tharman explained that the idea behind this “Work-fare” program is that Singaporeans must have work first before they can avail of this financial augmentation assistance from the state. It provides beneficiaries of direct government cash subsidy to workers or employees who earn not more than 1,500 Singaporean dollars a month of total income. The government gives them an additional S$500 cash subsidy deposited to their Central Provident Fund as a registered employee.
This sounded familiar with the “Katas ng VAT” that the Arroyo administration started giving to low-income families. But our VAT rate, compared to Singapore’s GST, is much higher at 12 percent. It was jacked up from the previous 10 percent two years ago and expanded the VAT to include electricity, gasoline and other refined oil products. As a consumption tax, Tharman pointed out, the GST (or VAT to us) is imposed on all purchases of goods and services and applies equally to all, whether rich or poor. So in all kinds of taxes, I agree with Tharman the VAT is the most progressive form of taxation.
There are also non-tax revenue-raising measures that the government of Singapore has adopted. Singapore has finally allowed casino operations in their tiny city-state, with the construction of not just one but two sites for these state-run gambling facilities. The first will rise at the Marina Bay by 2009. It will be called Marina Sands because it is in partnership with the Sands Casino of Las Vegas. The second casino, called Integrated Resort, will be put up in Sentosa and become operational by 2010. This casino is in partnership with Genting of Malaysia, but for Singaporeans they have to pay S$100 before they can be allowed to play in the casino. That’s the tax catch.
