Photo of Tharman Shamugaratnam from channelnewsasia shushan lam

Former Finance Minister and PAP candidate for Jurong GRC Tharman Shanmugaratnam threatened the middle class saying that there is no way to have welfare benefits like free education, healthcare and pension system for everyone without raising their taxes.

“So, when you think of free healthcare and free social services, you must realise it is not free. The average citizen is paying for it big time in these countries… because everybody, including the rich, is benefiting. It is a complete myth to think they are egalitarian systems.”

Photo of Tharman Shamugaratnam from channelnewsasia shushan lam
Photo of Tharman Shamugaratnam from channelnewsasia shushan lam

Currently, Singaporeans are facing an increasing cost of living and this is especially affecting the low and middle income because the growth of their salaries have been affected by the influx of foreigners. Just earlier this year in 2015, The Economist ranked Singapore as the most expensive city in the world. However, purchasing power of Singaporeans is ranked in the far flung 42nd position in a UBS report in 2011.

PAP candidate Tharman went on to claim that the middle class are getting great return for every dollar of taxes they pay, even greater value than the system in Finland. He however did not provide evidence behind the claims he made.

“In Singapore, for every S$1 that a middle-income family pays in tax in one form or another, they get back S$2 in subsidies – such as for education, healthcare and in retirement.

Compare that to Finland where for every $1 the middle-income group pays, they get back $1.30.

As for the bottom 10 per cent in Singapore, they get back S$6 in subsidies for every S$1 of tax – mainly GST – that they pay, he added. The top 10 per cent, meanwhile, get back 20 cents for every S$1 paid. “That’s what I call a fair system.”

In Singapore, the GST was increased multiple times to lower income taxes. Unlike other countries, Singapore charge GST for all items including necessities like utility bills and staple food. The poor has to go through mean testing before they are entitled to welfare benefits. If you have a HDB flat, the government will not help.

Tharman also resisted increasing taxes on the 1% richest saying that they “know how to move their money around the world.”

“I’ve been studying it for years. You can’t do it by just taxing the top 1 per cent. That’s a bluff. First, because the top 1 per cent know how to move money around the world. But secondly, you can’t jack up the tax rate for the top 1 per cent without affecting the next 5 or 10 per cent.”