Wednesday, Feb 25, 2015
Top of The NewsMiddle-income families cheer Budget benefits
Measures that help ease the rising cost of living particularly welcome
Published on Feb 25, 2015 1:34 AMBy Rachel Au-yong, Lim Yan Liang And Walter Sim
MIDDLE-INCOME families, a key target of Monday's Budget, were happy yesterday with the range of benefits for them, even as some noted that the measures were clearly aimed at specific groups.
People who stand to gain significantly appear to be the "sandwiched class", with young children to take care of and elderly parents to support, according to interviews with 20 individuals.
Their household incomes range between $5,000 and $15,000, a level that is above the bottom 20 per cent but below the top 20 per cent of resident households.
They say the measures that stood out in helping ease the cost of living include the halving of the monthly $120 concessionary maid levy for those with children or elderly parents, the removal of fees for all national examinations, top-ups to children's education accounts and the 50 per cent personal income tax rebate for this year, capped at $1,000.
But these moves that help reduce their expenses lack the feel-good factor of getting a direct cash handout, some said.
Indeed, in some cases, the raising of the salary ceiling for Central Provident Fund (CPF) contributions from $5,000 to $6,000 will cause their take- home pay to dip, even though their retirement savings will get a boost.
Still, many appreciate the help to cope with higher living costs.
Among them is tuition centre owner Matthew Soh. The 39- year-old has two maids to help care for his three children, one of whom, a four-year-old boy, is autistic. With the lower concessionary maid levy, he will save $1,440 yearly. "I'll plough the savings into my son's therapy," he said.
Mr Soh spends almost $4,000, or almost one-third of his total household income, on courses and speech therapy for his son.
Similarly, sales executive Ridzuan Jaffar, 32, welcomed this year's top-up of $600 to each of his three children's Child Development Accounts - a savings account in which the Government will match amounts saved by parents dollar-for-dollar up to a specified limit.
The $600 will pay for about two months' of the pre-school fees for each of his five-year-old twins, a boy and a girl. He also has an 18-month-old daughter.
The help for middle-income families was even acknowledged by those who have yet to start a family.
Business development manager Mabel Yeo, 29, feels she would worry less when she and her husband decide to have children.
"Giving money one-off for a newborn child may not be an adequate incentive, but a lower maid levy and more affordable childcare encourage dual-income parents to continue working without being burdened by crucial childcare arrangements," she said.
Singles like financial consultant Benjamin Ong feel the Budget's family-oriented approach does not affect them.
The 29-year-old bachelor, however is pleased with the 50 per cent tax rebate this year, which will benefit 1.5 million individuals who pay personal income tax.
But he finds this is offset by the raising of the salary ceiling for CPF contributions and an increase in petrol duties.
For Mr Ong, who earns $6,000 a month, the higher CPF salary ceiling means he takes home $200 less every month, even if it means more for his retirement later.
Nee Soon GRC MP Patrick Tay acknowledges the take-home pay for some will drop. But he pointed out that this goes to a worker's retirement savings, to which employers will also be contributing more.
"This increase both ways means more money for monthly housing loan payments, tuition loans for their children's university education," he said. "In short, it means more CPF savings you can use in the future."
Mr Ong is also worried about an increase in petrol duties, as he expects oil prices to rebound: "We don't know how long they'll stay down, but when prices rebound it will be an additional cost burden to drivers like me."
But many of those interviewed acknowledge the thinking behind the Budget is broadly consistent with that in previous years, and feel it is fair that the least well-off should get more.
Mr Soh, the tuition centre owner, pointed out that the Government has always been generous.
Drawing attention to the 2009 Resilience Package, which set aside $20.5 billion to save jobs and stimulate bank lending, he said: "When the economic crisis hit, the Government gave a lot of money to companies."
"They have been consistent with the giving, but this time, they targeted the right crowd," he said, referring to the middle class that has been hit by higher living costs.
Lawyer Michael Chia, 44, who has his own practice, expects his bottom line to be affected by the higher CPF salary ceiling and increased contributions to elderly workers.
But Mr Chia, who lives in an executive flat with his homemaker wife and four children, considers this a necessary trade-off.
"Previous Budgets have always looked at the 'ends' - the low-income, or businesses, and perhaps those in the middle have felt neglected, even as rising costs impact them," he said.
Others are glad that in Singapore's Jubilee Year, there is some encouragement to the better-off to give to worthy causes.
Finance manager Alice Lim, 44, who lives in a four-room flat with her husband and has no children, cited the higher Jubilee Year tax deduction of 300 per cent for donations, up from 250 per cent.
The couple make about $5,000 a month and she donates $500 a year to a few charities. "I'm glad for the increased tax rebate. But saving money on tax should not be the main motivation."
Added Mr Chia: "At the end of the day, we must not forget that the more privileged have a greater social responsibility."
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