For some reason, this year’s announcement on the government budget was conducted on the fringes of what can technically be the Lunar New Year season. Within the theme of oddity, this reallocation of government resources is weird indeed with last year to thank for the worst recession in our country’s modern history, the largest government deficit ever ($64.9 billion) and an equally eye-watering $100 billion to prevent the economy from free-falling even worse. While our government usually avoids deficit spending like some sort of plague, it is fortunate that they have amassed a large pile of reserve money to spend in such dire situations. Though the sheer size of it will raise questions for the future. So how is this year going to be any different ? Now that we have mostly normalized domestically… but the international markets remain a hot mess so far ? For the sake of time, I will limit this observation to three key points.
First up I will outline this seemingly innocuous 5% carbon tax co-written by the WP’s very own Jamus Lim. It was incredibly suspicious when a law written by the opposition got greenlit by the PAP’s litmus test… and like other occurrences, they benefit from this secretly. With a justification to slap penalties on anything that overtly pollutes, the price of Petrol sold here will soon rise by at least 23%. As we import a lot of stuff overseas using fuel-burning vehicles and have a bunch of middlemen passing these goods along to the stores, these extra costs will be forced upon the consumer. Best case scenario, food prices only rise at the same rate as petrol. Worst case scenario, it spirals out of control to DOUBLE by next year. But for the sake of maintaining a relatively stable society, please please please DO NOT go to the supermarket and buy a bundle of stuff to hoard for several months (ignoring the expiry dates).
Second effect of this budget…hiking of the GST from 7% to 9% has been delayed. Which is at least somewhat positive as it is entirely clear that the move is just a move for the IRAS to take more money from every purchase you make. Worse off, there seems to be rumors of GST being charged on FOREIGN BOUGHT GOODS. That’s right, not only stuff bought in the local stores will rise, even if you find a cheaper means on the internet, you have to pay another 7% or even 9%, making any discount you find obsolete ! While understanding that government expenditure will rise… wouldn’t it make more sense to push that increase onto the large corporations that headquarter here as a geographically strategic spot in Asia ? Especially with the corporate tax rate of profit over $300k in this country being a flat 17%. Just by a wee bit… say maybe 20% ? Or advocacy to have the average Singaporean wage rise or costs drop to at least combat yearly inflation ? I mean… compared to our western counterparts, our wages are incredibly undervalued.
Third and probably the most important bit: More deficit spending. I mean… just look at the larger nations we usually trade services or goods bunkered in from other countries ! Their economies have systematically got a stroke. The US stock market fully detached from the financial health of Uncle Sam… European farmers being forced to destroy thousands of tons of their crops because they cannot sell fast enough… only for them to make more of those crops just to adhere to harvest cycles… An even more chaotic balance of normalcy and utter panic from the Chinese Mainland as any province could be plunged into lockdown ON TOP of several floods that have razed their farm lands into swamps. Frankly, this is something I even doubt the PAP wants to happen. Very good foresight on the founders of this country to build a system to save up money in case something this catastrophic occurs… but it should be pointed out that it is entirely limited to… something above $ 1 trillion but below $ 2 trillion.. Not to mention that this depressing situation could bankrupt every small businessman that has either built up from generations of previous stewardship or the gambles of people trying to achieve financial independence.
Am I entirely angry with this unprecedented shift in public spending ? No ! This was all expected really. But do I believe that this budget will benefit the majority of people ? No! Even when the PAP shovels money from their financial reserves that they “worked so hard” to keep, they still have the guts to try and recuperate any loss by holding their people as collateral for a loan. It sickens me to imagine these kingmakers trying to squeeze every cent from the people to hold them in bondage for another few decades. In summary though, this is one of their dirty tricks that we have to tahan. It is the post-Covid spending of the government that we truly have to worry about. I have obtained news on future corporate mergers and long term infrastructure plans. While only speculation for now… if even half of what I heard comes true, this pandemic will be nothing more than a silly “accident” made in the past.
Learning how to be a future Day Trader, I am your loyal reader Justin