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Tuesday, February 26, 2013

Budget 2013: Should the young Singaporean family celebrate?

Everyone seems to have something to cheer about in the Budget that was delivered by Tharman Shanmugaratnam (DPM and Minister of Finance) on 25 February 2013, from the low income to the middle to the high to the obscene income.

Shiny head usually means plenty of goodies!

At first glance, Christmas seems to have been extended till February, with gifts being showered upon the population which just staged one of the biggest protests in the history of Singapore.  The low income could get excited over the Workfare Income Supplement, higher CPF contribution rates, S&CC rebates and GST vouchers.  The middle income could cheer about the property tax rebates, Wage Credit Scheme, reduction in Foreign Domestic Worker levy and more pre-schools.  The high and obscene income would be most happy about the personal tax rebates and possible reduction in car prices due to COE prices which are expected to come down by quite a bit.

Something for everyone.

But for the young dual income couple, which would likely fall in the middle income category, the financial and social odds of having a baby could now be further stacked against them:


While property tax rebates sound good, it will only help when you have a property to begin with.  As it is, property prices remain high for young couples starting out in their careers. While salaries have increased, the property prices have increased much more, resulting in longer and and substantial loan repayments.  Young couples would continue to think twice about the number of kids to bring into this world.


While more and better quality pre-schools are promised, nothing was mentioned about making it cheaper.  Even with the (on paper) very generous government subsidies for pre-school education/care, it is still a big drain on a young couple's resources.  For those who wish to build close bonds with their kids by home schooling them, having more pre-schools would not help these single income families one bit.  It might be worse since there is only one income chasing after inflation.


While COE prices are expected to go south, the only people who are popping the champagne are well, the rich people who are more likely to be drinking them.  Sorry to uncles gulping their beer in a neighbourhood kopitiam.  With the 50%/60% loan limits and 5 year max loan tenure, the cash rich would be rejoicing as they are not affected by it.  The additional ARF that would apply on luxury cars should be lower than the expected drop in COE prices.  So for young couples with stable jobs hoping to buy a car to prepare for parenthood, it would mean that many of them will now find themselves out of cash to downpay that dream car. It is a very clear message that having a car in Singapore is for the rich, not the needy.

Work-life balance

Last month, I blogged about work-life balance being an important factor in encouraging Singaporeans to have babies.  The Budget did not address this.  In fact, I think it has gone the other direction all together.  The message seems to be:
"Get to work (i.e. Workfare, Wage Credit, CPF contribution) and increase your productivity (i.e. enhancements to Productivity and Innovation Credit, increases in foreign worker levy) and we will make it easier for you to manage the household (i.e. more childcare centres, reduction in maid levy, reduction in personal taxes, S&CC rebates and GST vouchers)!"
So on second thought, it's not Christmas season but the Chinese New Year instead.  The problem is, we are already nearing March and the Chinese New Year goodies that we enjoyed have all but expired.

Good, but for limited time only.


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