Wednesday, September 08, 2010

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Saturday, July 31, 2010

Thursday, July 29, 2010

Medisave – pay up or be charged?

Medisave – pay up or be charged?
Posted by theonlinecitizen on July 28, 2010 67 Comments
Leong Sze Hian –

Several Singaporeans living overseas and in Singapore have contacted The Online Citizen to tell us that they have received letters from the CPF Board asking them to pay their CPF Medisave arrears, incurred many years ago.

For example, Jane (not her real name), has been married to a European citizen, working and living in Europe, since 2003.

She had not received any letters from the CPF Board for several years, until the recent demand letter arrived at her European address. The letter said: “Failure to pay Medisave contributions is an offence under the CPF Act and is liable for composition fine and possibly Court action.”

She was self-employed and was struggling to pay her full Medisave contributions consistently, as she had to support her bankrupt father, ailing mother and sibling who was studying.

About eight years ago, under threat of being charged in court, she struggled to pay about $500 a month under an installment plan worked out with the CPF Board for about a year, but was unable to continue for the rest of the agreed installment period of about 2 years.

Her outstanding Medisave arrears is now about $12,000.

As she is only earning about 1,000 Euros a month now, she is not able to pay her Medisave arrears.

She is afraid that if she is charged in court, and if a warrant of arrest is issued, as we understand is normally the case for those who don’t turn up, she fears that she may be arrested if she comes home to visit her family.

She wonders if her only solution to her “Medisave” predicament is to give up her citizenship.

Or is she condemned to a lifetime exile form her country of birth?

Since she is living in Europe and will not return to Singapore, even if she is able to pay her Medisave arrears, what is the point of asking her to contribute, as she may never be able to use her Medisave which is restricted for use in Singapore and 12 approved hospitals in Malaysia since March this year?

Another example is John, who is a retired civil servant, and receives a pension and free lifetime medical benefits.

He too has been served with letters of demand and threat of court action for Medisave arrears incurred as a self-employed person.

When he told the CPF Board that it was pointless for him to contribute to Medisave even if he could afford to, because he gets free medical treatment, he was told that he could use his Medisave for his wife.

When he told them that his wife was also a civil service pensioner with free medical benefits, he was told that he could use it for his children.

When he told them that he has no children, he was told that it was required by law to contribute to Medisave.

I wonder how many people in Singapore or Singaporeans living overseas, owe Medisave, and have received letters of demand.

Are these letters of demand being sent to Singapore permanent residents (PRs) living in Malaysia, who owe Medisave too?

How many will be served with court action?

Self-employed persons are required to contribute to Medisave if they earn more than $6,000 a year.

If you earn just $500 a month, how do you survive?

If you are struggling to survive, how can you afford to make Medisave contributions?

Tuesday, December 05, 2006

Government fees freeze after GST rise

Business Times - 05 Dec 2006
LETTERS TO THE EDITORHow will the govt cushion impact of GST hike?
I REFER to media reports that there will be no government fee increases for one year after the proposed Goods and Services Tax (GST) hike kicks in.
This promise was made by the second finance minister.
The government will also continue to absorb the GST for education and subsidised healthcare services.
What is the point of freezing government fees, when they can go up before or one year after the GST increase?
What is there to prevent government agencies from raising fees higher one year after, to account for not being able to raise them the previous year?
GST increases are permanent, whereas offset packages have been one-off, so is not the one year freeze now also a one-off?
Instead of freezing fees for one year, shouldn't fees be pegged to not just go up, but down also, depending on each government agency's revenue, costs and profits?
In this connection, I would like to suggest that every government agency be subject to independent scrutiny as to the basis and justification for increases.
The role of independent directors has been the subject of much media attention and debate recently, particularly in the context of protecting the interests of minority shareholders.
So, in a sense, similarly, shouldn't there be some 'independent directors' to look out for the interests of the poor when GST goes up?
In the past, although GST was absorbed for subsidised healthcare services, the fees for subsidised as well as non-subsidised healthcare services were raised.
So, the net effect is increased healthcare costs for Singaporeans.
Since May, almost all the increases have been non-government fees, such as electricity, taxi fares, electronic road pricing (ERP), higher food prices due to food centres upgrading, bus and MRT fares, university fees, postage, etc.
All these - as well as other goods and services - are expected to increase to pass on the GST increase to consumers, as has happened in the previous GST increases.
So, any one year freeze in government fees, may be dwarfed by increases by the private sector.
I think Singaporeans may want to know more detailed and concrete assurances of how the government plans to cushion the impact of the GST increase, on an on-going basis, rather than just one-off measures.
Leong Sze Hian Singapore
Copyright © 2005 Singapore Press Holdings Ltd. All rights reserved.
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Tuesday, November 14, 2006

Calling all Singaporeans for more suggestions on the proposed GST hike and more help for the needy

The Prime Minister announced in Parliament on 13 November that the Goods and Services Tax (GST) may be increased to 7 percent, up from 5 percent presently. Mr Lee said the hike is necessary to finance the enhanced social safety nets, which are needed to help the lower income group. There are plans to increase the grant to the needy to buy their first home, as well as to give them more "workfare" bonuses as an incentive to stay employed, and it will come with a package which will more than offset its impact on the poor.
Since May, there has been increases in chronological order, electricity, taxi fares, electronic road pricing (ERP), food and beverage prices due to the higher rentals of upgraded food centres, university fees, development charge for non-landed residential sites, bus and MRT fares, HDB 1-room and 2-room rentals, etc.
GST is a regressive tax because it generally affects the lower-income more than the higher-income. As income tax rates have been reduced gradually since the introduction of GST, the higher-income has also in a sense benefited more on a relative basis. Instead of just increasing GST, I would like to suggest that we explore the possibility of taxing the higher-income more, as well as other cost-cutting measures like reducing the number of scholarships for foreigners. We could also consider waiving GST for basic necessities like food, utilities, public transport, medical fees, etc, like some other countries.
Past experience indicates that most businesses may just pass on the GST increase to consumers, often times disproportionately more than the actual increase.
"A package which will more than offset its impact on the poor" may lead to those who are marginally above the poverty level to be in a way "squeezed more" in relative terms.
Our experience with the New Singapore Shares (NSS), Economic Restructuring Shares (ERS), etc, has shown us that there may be leakages in the system in that tens of thousands may not get the help that was designed to help them most, because they failed to register by the datelines imposed.
Increasing GST may also affect Singapore's competitiveness internationally, as our current costs are already much higher that our neighbouring countries.
I suggest that a comprehensive study and review be conducted to examine the extent to which GST and its increases, may have contributed to the widening income gap. In so doing, we may avoid the fine balance of increasing the probable cause of the problem which we are trying to address, which may further aggravate the problem. This is reflected in the Department of Statistics' (DOS) General Household Survey 2005 (GHS) that about 40 per cent of households had declining incomes (inclusive of the bottom 10 per cent of households which had no income from work, presumably most of which are retiree households) after adjusting for inflation from 2000 to 2005, and the DOS Household Expenditure Survey 2003's (HES) data that about 40 per cent of households had a deficit in their monthly income-expenditure.
We could also try to explore other resources that Singapore has to help the poor, such as our US$132 (S$205) billion foreign reserves which has been ranked number one in the world on a per capita basis. According to the International Monetary Fund (IMF) World Economic Outlook Database September 2006, Singapore is ranked number one in the world for current account balance in percent of Gross Domestic Product (GDP) ratio. Singapore's ratio of 28.5 in 2006, is more than double the second ranked country, Switzerland's ratio of 13.3.
I believe the additional revenue from the two per cent GST increase is estimated to be less than $2 billion. This year, Temasek's paper losses in Shin Corp is already estimated to be over $1 billion and SingTel's SingTel Optus estimated expected write-down is about $8 billion. We could try to re-examine how our Government-linked Companies (GLCs) invest, particularly overseas, with a view to learning from the experience and the lessons, so that in future,we do not in just one year, have a paper loss that may be more than four times the annual increase in revenue from the GST increase.
The Government Investment Corporation (GIC) had returns of 8.2 per cent per annum for the last 25 years, and Temasek had returns of 18 per cent per annum for the last 32 years. With about $205 billion of foreign reserves, if just one per cent of the GIC and temasek's average annual returns is used to help the needy, there may be no need to increase GST, or a lower increase.
As to "plans to increase the grant to the needy to buy their first home", the lower-income may generally have a higher probability of encountering financial difficulty at some point in a typical 30-year mortgage, and thus risk losing their homes and CPF.
Some of the measures to help the needy, may unintentionally end up creating other problems for them.

Leong Sze Hian

Tuesday, October 31, 2006


Mr Tan Jee Suan, a 46 year-old Singaporean odd-job labourer with two young children, committed suicide by jumping on to the MRT track at Chinese Garden station on October 18.
According to media reports, he had been receiving financial assistance from South-West Community Development Council of $120 a month from September 2003 to November 2004, $375 a month from November 2004 to June 2005, and was rejected twice last year and this year applying for financial assistance, because his household monthly income was $1,400. In February, he was advised to apply for the Pay-As-You-Use (PAYU) meter to pay for utilities, but he found it too complicated and gave up. He had a history of not having a steady job, and after being unemployed for the last four months, owed over $1,000 in utilities for more than four months, HDB payments, school fees for a year, etc. Of late, they were having difficulty putting three meals on the table, and were surviving mostly on instant noodles. When Mr Tan was found, he had only $16 in his wallet. His last act on the day he died was to tell his wife that he would find some money to give to her and gave nine dollars to his youngest son for the family's dinner and transport fares, and told him that he was going to work and asked him to look after his mother.
Despite being a person with a polio disability, his wife was working in a factory earning about $500 a month. She pays about $50 a month for her medical fees. Her husband had complained of body aches, but refused to seek medical treatment because he said he could not afford to. She did not even have the bus fare to go to see her husband’s body, and the policeman who informed her of her husband’s death gave her five dollars. They still have 15 years' left of their housing loan to settle and Mrs Tan said that she has to pay more than $300 a month from her CPF for the three-room flat...
So far, Singaporeans have donated about $500,000 to the family.
The utilities company in a letter to the media on October 25, said that it has "on many occasions, referred families in dire financial straits to the Community Development Council". Hence, Mr Tan lost his will to live, despite being referred by the utilities company to the CDC. I would like to suggest that schools can also send an alert when a student has not been able to pay school fees for say more than six months, so that no Singaporean will ever be driven to desperation again, without anyone knowing about their plight.
According to HDB’s annual report, it gave financial assistance to 28,386 flat owners for the financial year ended March, a drop of 26 per cent from the previous year. According to the Department of Statistics General Household Survey 2005, there were 113,646 households with monthly income below $1,500, and 106,384 households with no income from work – presumably most of which are retirees.
According to the article "Mortgage sales of HDB flats on the rise: But trend is to be expected as banks' portfolios mature, say industry watchers" by Siow Li Sen (Business Times, Oct 20), and a New Paper report on October 20, just four property auction companies have had increasing HDB bank loan foreclosures of about 38 flats a month (456 a year), which is an annual increase of about 690 per cent (456 divided by 190 divided by 3) over the 190 flats foreclosed in the first three years after bank loans started for HDB flats on January 1, 2003. All the banks offering HDB loans declined to reveal figures on their foreclosures. After three years and nine months, the default rate of about one per cent is quite high as there are already about 700 foreclosures out of a total of about 70,000 HDB flats with bank loans. On October 13, HDB announced a new procedure that from January 1 next year, those who want to apply for a housing loan will first need to obtain a loan eligibility letter before they can commit to buying a new flat. How many Singaporeans have to lose their homes and CPF, before we re-think the policy change of giving the first charge on property to banks?
Singapore Power’s profits increased by 53 per cent last year. SBS's profit after taxation rose 5.1 and 158.6 per cent, for 2005 and 2004 respectively. SMRT's profit after taxation has risen from 56.8 million in 2002 to 103.6 million in 2006. Now, before the expected increase in revenue and profits from the fares hike effective October 1, SMRT has reported a 13 per cent year-on-year rise in net profit to $31.5 million for the second quarter ended September 2006.
I would like to suggest that there be a review of whether and to what extent basic essentials like utilities and transport should continue to be profit-making when they are in essence monopolies?

Leong Sze Hian