Singapore’s ruling party PAP government went into a reckless spending spree again to save businesses of their friends and cronies. All government-linked corporations and pseudo-private entities – mostly under Temasek Holdings – like SIA and CapitaLand now have access to S$33 billion of taxes to fund their doomed businesses getting wage subsidies, tax rebates, rental relief and cash handouts.
One of the key beneficiaries is construction companies, who will receive another month of foreign worker levy rebate of S$750 each and a foreign worker levy exemption.
There is now a record S$74 billion deficit, and the bad news is it would take Singapore at least 30 years to return the amount in real sum. This is built on the impossible assumption that there is a unbroken running record of economic boom with no similar pandemic and financial crisis for at least 20 years.
The deficit will be inherited by the new government, as the ruling party is likely to lose in the coming general election, due next April 2021.
In the coronavirus aftermath, governments like Singapore who spend money they do not have will have to set severe austerity measures that eat into funding for education, public housing and social spending.
In Singapore context, tax and CPF rate hike will be at unprecedented level regardless of who is government next. Unfortunately, with the PAP in power, money guzzling billion dollar projects like Terminal 5 and Founders’ Memorial will continue – meaning the pit is deeper for Singaporeans. Funding Terminal 5 alone will set back Singapore’s yearly budget surplus further for at least 5 years.