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Singapore's fiscal position will worsen more than estimated earlier this year.
Hopes of any rebound in jobs creation have been hit by sluggish growth in jobs.
Latest expectation is that "a jobless recovery" will continue and thus depress operating revenue in the face of rising operating expenditures.
Rather than alarm the population or make explicit admissions, a new "diabetes/obesity" measure will be introduced by next budget to raise tax receipts and plug additional revenue shortfalls due to a slow economy.
1. Recall the recent slew of price hikes that have taken or will take effect (Made Public):
– Petrol Duties (Feb 2015)
– Car Park Fees (Jun 2016); "Last Revision was 14 years ago"
– Childcare Centre Fees (Jan 2017); "Highest in at least 6 years"
– Carbon Tax (Feb 2017)
– Service & Conservancy Charges (Feb 2017)
– Water Prices (Feb 2017); "First time in 17 years"
And now will likely be introduced after "studies":
– Sugar/Diabetes/Obesity Tax (Aug 2017)
All the above hikes help to deal with immediate fiscal challenges since 2015 as the economy has slowed to a crawl
— the new normal 2+% GDP growth rate.
It is one thing to impose a sugary tax in the absence of a slew of price hikes, it is a totally different matter if the sugary tax comes on the heels of a slew of price hikes.
2. Growing Dependence on Foreign Worker Levy coupled with a sluggish job market, have become a drag on revenue growth.
FY2017 estimates for a rise in foreign worker levy now appears overly optimistic in light of persistent job losses [see point 1], especially with the loss of 36K construction jobs over the last year alone, which is not surprising given investment commitments have fallen to a 13 year low.
The current one year decline in construction activity also does not augur well for the general economy and jobs creation.
3. Long Term Picture: Singapore Government Budget Surplus/Deficit as % of GDP, 1990 – 2016
4. "If a company runs into deficit more often than not, the concern is that the management is losing the plot", says Wong Wei Han [ST Opinion]
http://www.straitstimes.com/opinion/what-it-takes-to-keep-singapore-in-good-fiscal-health
It's equally, and some would say is even more worrisome, if revenue raising measures like taxing basic food and drink, ostensibly to encourage a healthy lifestyle, are taken to prevent a country from falling into overall deficit.
This post first appeared on a popular local forum.
