Singapore Woes Voters With Cash Grants, Tax Cuts

Jakarta Globe, February 18, 2011

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Singapore. Singapore on Friday unveiled more than a billion dollars in grants and will increase the tax firms must pay for hiring foreign staff amid expectations a general election will be called soon.

Lower-income Singaporeans will receive up to 800 Singapore dollars ($630) by May 1 as their share of the city-state’s record 14.5 percent economic growth in 2010, Finance Minister Tharman Shanmugaratnam told parliament.

“To share the fruits of last year’s exceptional economic growth, I will give growth dividends to all adult Singaporeans,” he said.

“The majority of Singaporeans — 80 percent — will get 600 to 800 Singapore dollars each.”

He said the growth dividends would benefit about 2.5 million Singaporeans and cost the government 1.5 billion Singapore dollars this year.

Shanmugaratnam also rolled out income tax reductions and rebates aimed at the middle class.

Rising inflation and an influx of foreign workers are expected to be hot issues in elections that must be held within a year.

Shanmugaratnam said levies on companies hiring foreigners will be raised next year in order to slow down the flow of guest workers mostly coming from China, India and Southeast Asia.

“If we do not take further steps now to raise the foreign worker levy, it will be difficult for us to prevent the proportion of foreign workers from rising over time, and exceeding our long-term target of one-third of the workforce.”

With falling birth rates threatening to hurt its long-term economic prospects, Singapore rolled out the welcome mat for foreign workers during the 2004-2007 global economic boom.

But after the 2008 financial crisis, the government took a fresh look following complaints from citizens that foreigners were increasingly competing for jobs, housing and medical care.

Agence France-Presse