Tan Kin Lian - Perspectives Will subsidies bankrupt a country?
The PAP leaders had, in the past, told the people that subsidies could bankrupt Singapore. While this statement may be true partially, it may also be largely false. 

Whether a subsidy will bankrupt a nation depends on the type of subsidy, if the subsidy can be controlled against abuse, and if it can be paid from taxation. 

Over the past years, the government spending (i.e. subsidy) on education and health form a large part of the budget. They were covered by taxation, and did not bankrupt Singapore.

The subsidy in the 2023 budget were $10.89 billion for education and $12.59 billion for health. I describe these items as subsidy because the government provided these services for free, or for a small payment. The rest of the spending were "subsidized" by the government. These subsidies did not bankrupt Singapore. 

Recently, the prices of electricity, water, transport and food had increased sharply and the higher cost of living has become a big burden for many lower income households. Should the government provide a subsidy on some of these essentials, so that the burden would be lightened for the people?

Some PAP supporters argued that these subsidies would bankrupt Singapore. They are talking nonsense. It depends on whether the subsidies are large or small, and whether they could be managed to prevent abuses. 

These PAP supporters asked another question - will the people be willing to pay higher taxes to fund these subsidies? This is another nonsensical argument. It may not be necessary to raise taxes to fund these subsidies. These subsidies can be funded from the current surplus in the budget (if any) or by transfers from the past reserves. 

These issues should be considered carefully by the government leaders and should not be decided based on irresponsible rhetoric by their supporters or opponents. These leaders were elected to make wise decisions and judgment for the benefit of the people. 

Among the decisions to be taken is the need to subsidize some of the high costs that are being borne by the people on a temporary or more permanent basis. 

Tan Kin Lian




 

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