ST June 23, 2008This reminds me of what happened in early 2007. The government was discussing its plans to raise GST from 5% to 7% in July 2007.
Govt doesn't make money from ERP
THE CashCard reader in labour chief Lim Swee Say's car beeps four to six times a day. This is because he passes through that many Electronic Road Pricing (ERP) gantries along busy city roads to get to and from work.
He was driving home the point that ERP exists solely to control road congestion and not to enrich government coffers or raise the cost of living for Singaporeans.
Mr Lim was responding to a question at a dialogue on why the Government was raising ERP rates by as much as $2 and adding five new gantries from July7 in a climate of rising inflation.
The new gantries along the banks of the Singapore River bring the total number of gantries islandwide to 65.
Mr Lim said Transport Minister Raymond Lim had told Parliament previously the Government does not make any money from the ERP increase.
The reason: It will collect $70 million a year from the ERP increase, but will lose $110 million due to the 15 per cent reduction in road tax from next month.
That is, in fact, a net loss of $40 million, he said.
Back then, the Finance Minister had said that even with the GST increase, the government would suffer a $700,000,000 budget deficit. In other words, the government estimated that even with the GST increase, it would collect $700,000,000 less than what it actually needed, to run the country.
Many Singaporeans were thus persuaded that the GST increase was a necessary evil.
But what happened next?
One year later, it was revealed in Parliament that the government did not have any budget deficit for the 2007/2008 financial year. Quite the opposite - it had a huge budget surplus of $6.45 billion dollars.
In other words, the government had collected $6.45 billion dollars more in taxes than what it actually needed to run the country. The people got suckered again.
For more details, refer to my old post here.
So when Lim Swee Say tells you that the government won't make any money from the ERP increase (and will in fact suffer a $40 million loss), take it with a pinch of salt. Or maybe three big tablespoons of it.
The last time round, our Finance Minister missed his Budget estimate by $7,100,000,000. In percentage terms, what makes you think Swee Say will do any better?