Feb 27, 2008

The Government Missed By $7,150,000,000. Just Another Honest Mistake.

The Straits Times reported a shocking piece of news yesterday. The article itself did not really highlight the point, but tucked it away somewhere near the end of the article (see bold text below).
ST Feb 26, 2008
Rising costs, price hikes top concerns of MPs
They back strategies to keep inflation in check but say individuals and businesses need help to cope
By Lydia Lim

RISING costs and their impact on people's ability to make ends meet dominated the start of this year's parliamentary debate on the Government's Budget.

Many of the 19 MPs who spoke during the five-hour session praised the Budget for being forward-looking and generous, but 13 also voiced concern over a slew of recent price hikes.

MPs from the People's Action Party, Mr Inderjit Singh and Mr Michael Palmer, recited a litany of these increases in the past year alone.

Taking last December as an example, Mr Palmer said: 'The price of luncheon meat went up from $1 to $3, taxi fares went up, school bus fares went up and even the opposition's Potong Pasir Town Council added to the list with an increase in its service and conservancy charges.'

MPs said that businesses have been hard hit by steep hikes in office rents, and asked for tax reliefs to help them cope.

For individuals, Mr Palmer suggested that part of the Budget surplus of $6.45 billion be used to set up a contingency fund to help low-income families should inflation worsen.

Mr Singh, who chairs the Government Parliamentary Committee for Finance and Trade and Industry, urged a review of the Government's avowed strategy to grow the economy as fast as possible in good years. This had contributed to the current situation of overheating and high prices, he said.

'The 'grow-at-all-costs' policy, with the cost increases triggered or allowed by the Government, have worsened the income divide,' he said.

At the same time, MPs threw their support behind the Government's five strategies to keep inflation in check.

These include allowing a gradual appreciation of the Singapore dollar to rein in imported inflation, and growing the economy so that wages for most workers go up by more than costs.

Nominated MP Cham Hui Fong of the National Trades Union Congress pointed out that last year had indeed been a good year for workers.

Those in the unionised sector enjoyed the highest bonuses since 1990 and the lowest retrenchment rate since 1994, she said.

But fellow NMP Eunice Olsen stressed that in tackling inflation, 'preaching' to Singaporeans to buy cheaper house brands was not a solution, as many people were already buying the lowest-priced options available.

Four MPs - Workers' Party chief Low Thia Khiang, NMPs Gautam Banerjee and Ms Olsen, and Mr Singh - took issue with the wide gap between the Government's projected $0.7 billion deficit and the actual $6.45 billion surplus.

This showed that the Government's 'Budget marksmanship' had worsened, said Ms Olsen.

The four MPs also questioned whether the Government had been hasty in raising the Goods and Services Tax (GST) from 5 per cent to 7 per cent last July, since it did not really need the revenue it generated.

Both Mr Low and Mr Banerjee asked for the GST to be restored to 5 per cent.

But Senior Parliamentary Secretary for the Environment and Water Resources Amy Khor warned against assuming that the economy would prosper and produce a surplus every year.

She said: 'The Finance Minister has been judicious in balancing competing priorities and seeking to invest in the medium- and long-term future, while dealing with the immediate concerns of citizens.'

More than 20 MPs are expected to speak when the debate resumes today.
So early last year, the Government had projected a budget deficit of $0.7 billion. This means that according to the Government's own estimates, in 2007 it would collect $0.7 billion (via taxes etc) less than what it would actually need to spend.

It turns out that the Government scored a massive miss. In 2007, instead of collecting $0.7 billion less than it needed, the Government collected $6.45 billion more than it needed. From who?

You, the people. Of course.

Among other things, it becomes quite evident that the GST need not have been raised in July last year.

In his Budget Speech 2008, the Finance Minister is very quick to try to explain away last year's massive miscalculation:
"We started the year expecting a growth rate of 4.5% to 6.5%, which was also in line with market forecasts. With actual growth at 7.7%, Corporate and Personal Income Taxes came in some $1.0 billion higher than projected. GST revenues also exceeded our projection by about $1.2 billion, mostly from higher consumption.

GST collection arising from the 2 percentage point hike in July is estimated at about $1.4 billion in total, which now just matches the size of the GST Offset Package and Workfare Income Supplement tranches that were distributed in FY2007.

However, the largest boost to revenues came from the exceptionally buoyant property market last year. Prices of private residential units rose by over 30%, much higher than industry forecasts of around 10% to 15% at the beginning of the year. The volume of property transactions went up by over 60%. Stamp duties consequently rose to an unprecedented $3.8 billion, $2.3 billion higher than expected. Other property related revenues were around $1.1 billion above projections. These were large gains, out of the ordinary, and which we cannot expect to see very often.

The overall budget surplus of $6.4 billion was therefore the result of a strong economy and property market."
What is he saying? That the three biggest reasons that the Government collected so much more extra money from the people are:
(1) the property market performed unexpectedly well, leading to a unexpectedly large increase in property-related tax collection;

(2) Singaporeans and companies made an unexpectedly large amount of money, learning to an unexpectedly large increase in income tax collection;

(3) Singaporeans spent an unexpectedly large amount of money, leading to an unexpectedly large increase in GST collection.
By this time, you will conclude that the Singapore government is unexpectedly stupid at managing its own money and making its own financial estimates.

Either that, or you are a very kind person, and always willing to give the benefit of the doubt, and you will say that indeed, the property boom and rapid economic growth in 2007 could not reasonably have been foreseen.

But wait, I have more to say.

Click here for the Government's revenue estimates. You'll see that the Government gets its money by collecting nine different classes of tax, namely:

B10. Income Tax
B20. Assets Taxes
B30. Customs and Excise Taxes
B40. Motor Vehicles Taxes
B50. GST
B60. Betting Taxes
B70. Stamp Duty
B80. Selective Consumption Taxes
B90. Other Taxes

Tharman has told you that in 2007, the Government collected much more money than projected, for B10, B50 and B70.

But there's something interesting which Tharman conveniently didn't tell you. The Government had over-collected money, not just for B10, B50 and B70. But for every single category of taxes, from B10 to B90.

Now how could the Government be so completely off the mark?

Personally, I see two possible explanations:

(1) The Singapore government is unexpectedly stupid at managing its own money and making its financial estimates.

(2) In early 2007, it was the deliberate intention of the Singapore government to make low projections for its revenue, so that it could publicly claim that there would be a budget deficit of $0.7 billion. Therefore more Singaporeans would be willing to believe that the 2% GST hike in July 2007 was necessary.

Which explanation do you prefer?


Anonymous said...

While I believe that more social security spending and a better rein on inflation would be good for Singapore's current situation, I think that no one in government predicted (and could have predicted) the phenomenal performance of the economy this year. A buoyant economy would of course raise the revenues from all those categories mentioned.

I think the key question is what they will do now with that huge surplus. Investing it in Sovereign Wealth Funds should not be the answer.

Anonymous said...

(2) In early 2007, it was the deliberate intention of the Singapore government to make low projections for its revenue, so that it could publicly claim that there would be a budget deficit of $0.7 billion. Therefore more Singaporeans would be willing to believe that the 2% GST hike in July 2007 was necessary.

Errr Mr Wang you might want to correct the above "2% GST hike" to "2% point increase" or for more impact the 40% rise in GST (from 5 to 7% is not 2% increase but 2/5 x 100 = 40%)

Looks like even you got hit by the mass media propaganda/brainwashing.

When I speak to many people on the street they too think that the GST increased by only TWO PER CENT.

I would explain to them, if I have a business that earns $100,000 in profit a year and you are a shareholder and you earn 5% of the profits, you collect %5000. Now I increase your collection to 7% of the profits, you get $7000. From $5000 to $7000 is a 2% increase only ar?

Anonymous said...

I believe we singaporeans need a good dose of bad government to wake up. Watch how our GIC / Temasek investments are doing. All this talk about the poor in Parliament really makes me worried. This time last year, after all that talk in the parliament sitting before budget, the GSt increased by 2% points to help fund WIS,as well as minister salary.
I guess it is true, if the ministers want a higher salary, you expect them not to foul up - at least not by $7 bil.....

Anonymous said...

So does this means that Mr Lee is the Undisclosed World richest man?

Anonymous said...

Looks like our ministers are not that unique or special after all, but they deserve their sky high salaries so that they can continue to make only 'honest mistakes'.

Anonymous said...

"Looks like our ministers are not that unique or special after all, but they deserve their sky high salaries so that they can continue to make only 'honest mistakes'."

cos our coffers can only early excessive salary by capitalizaing on 'honest mistake' !

Anonymous said...

I think they're just plain stupid/incompetent. Why raise GST if you know you're going to get 7 billion cold hard cash in surplus.

And don't forget, the news of raise in GST coincided with that of the raise in Ministers' salary.

Anonymous said...

"Looks like our ministers are not that unique or special after all, but they deserve their sky high salaries so that they can continue to make only 'honest mistakes'."

cos our coffers can only earn excessive salary by capitalizaing on 'honest mistake' !
Of course, their benefits can only be the expense of the citizen and always since independence in 1965.

Everyone knows that, LKY knows that (Read his memoirs), and the coffers family knows that, otherwise someone will want to explain why PayAndPay scheme work only in Singapore not the rest of countries ?

Ser Ming said...

Just curious are there other 'sub-tax' other B90. Other Taxes? Like ERP or something? If there are quite other few 'sub-tax' that falls under B90. then we would actually have more than 9 kinds of tax.

Sounds cool.

Anonymous said...

isnt this whole wrong forecast mainly the fault of one person i.e. The Finance Minister?

anyway the role of minister of:
trade and industry
+ education
+ finance
doesnt seem to mix very well.

wikipeida says he has been arrested and convicted before. looks like bad publicity

Anonymous said...

This is the ingenuity of the government and the envy of many other governments. Excellent for a country with no revenues from natural resources except a tiny island surrounded by seawater.
The big downside is the ordinary folks, middle aged, aged and the poor will be the hardest hit due to GST, inflation and overcrowding (physically and economically). But doesn't really matter because I think PAP will still be the government come next election because there will again be many walkovers. So just bear with it. Again the envy of other governments.

Anonymous said...

I do not believe that the finance minister did not see his numbers throughout the year and still went ahead to raise GST. Forecast of economy of 1% over top of their own forecast = 7 billion off target? Come on.
I say they should:
1. reinstate GST to 5%
2. give all the surpluses back to CITIZENS (only please) as a one off since they already projected a defecit. (that's already a saving of 0.7billion)
3.Peg the FM's KPI (and hence compensation)to a factor of his forecast. In the private sector, if you can call your own targets, you will be hung by your own hands. You can't keep the cake and eat it at the same time. Live by the sword, die by the sword. Since they want to be paid top dollar for holding political office.

Anonymous said...

A source of mine within MTI has also stated that the $6.45b surplus figure is AFTER "transfers" to GLCs such as GIC and Temasek. The amounts of such "transfers" are a closely guarded secret, and very few people have access to the official figures.

Needless to say, the actual surplus figure may indeed be much, much higher.

Anonymous said...

'I do not believe that the finance minister did not see his numbers throughout the year and still went ahead to raise GST'

Well, someone else holds that portfolio now, but it seems to be a
timely and convenient change. Were there more reasons than what we have been told? I wonder.

denzuko1 said...

So with the Surplus this year, will the government go for a SGD7.15Bil deficit for year 2008?

Anonymous said...

Hey, the World's Richest Man and Richest Family may not have been recorded anywhere.

There was a change in the Finance Minister just before the Budget Debate. What do you think?

Anonymous said...

obviously most of you haven't learnt a thing our gahmen have been telling you all this while. the reason for the screw up (if it is any at all) is that the salary level of the ministers are still too low. increase the salary of our ministers and our budget surplus will be reduced further and all problems will be solved.

Anonymous said...

"isnt this whole wrong forecast mainly the fault of one person i.e. The Finance Minister?"

Who is the finance minister in the first place ? It is the Dragon Clown Prince, LHL, who quickly approved the hike in minister's pay and GST's hike, and then pass everything to his scrapegoat, Mr Tharman Shanmugaratnam.

Stop the cowardice, LHL....

Anonymous said...

Hong Kong also has surplus budget too and see what they do about it.

CNA: Booming Hong Kong cuts taxes as surplus soars
(dated 27 Feb 2008)


Tsang estimated the budget surplus would reach a record HK$115.6 billion (US$14.8 billion) in the fiscal year to March, four and a half times the government's forecast and nearly twice as much as last year's figure.

HK's estimated/actual budget is equal to 4.5 times. The budget in Singapore dollars is about $20.7b.

But, compare to Singapore's estimated/actual budget =

-$0.7b over $7.15b

Maybe, our calculators are different from the HK's calculators.

Anonymous said...

That will mean that they are:
i) totally incompetant
ii) totally dishonest and wicked (laying more burdan on the middle and lower class while increasing their own by 30-40%)

Anonymous said...

they need to take more from us to fund 'freebies' for foreign investors, education for foreigners, etc etc... we are probably working more for foreigners than for the benefit of our own people

Anonymous said...

I thot our Dragon Crown Prince was a 1st class scholar in mathematics ?

How can he make such a mistake ?

You mean his credentials are ........

Anonymous said...

how well had he done in restructuring the education of Singapore.. can be easily translate to how well he will do in this office..

Anonymous said...

And very few people know that the way the Government calculates its revenues does not conform to usual international practice. If they used international standards to calculate their revenue, the budget surplus would be WAY WAY WAY higher than what it is.

Anonymous said...

hey btw.. does anybody know that foreign financial institutions are being taxed at a higher rate this year?

oh and of course NTUC Income is not being affected

Anonymous said...

my european friend had this to say "so do cleaning ladies get more money now that there are higher taxes?"
"and what kind of welfare do they get when they retire (provided they don't have to work till they die)?"

"why do your elected politicians get so much money?" "what do they do?"

wow.. our our ministers are sooo talented (according to old Lee) that they missed the projection by a light year

Anonymous said...

Is Singapore only for the rich and foreigners? I am quite disenchanted with this government who has so little compassion to help it's own citizens. And everyday, those of us working in MNC can see how our so called foreign talents don't even hold degrees in their own country but earn 5 times our pay over here. It's disgusting and i'm making my own plans to leave this place. Brain drain? Blame who?

Anonymous said...

Does abolishment of estate duty mean that we'll never know how much rich people such as LKY accumulated during his lifetime?

Blogter said...

$7b is not such a big error when compared to the Hong Kong error of about $15b.

Of course, their ministers are not paid as much.

Anonymous said...

"Is Singapore only for the rich and foreigners?"

im afrid it seems so! the targeted population for SG's to hit 6 million or so (provided our island doesnt sink?) already the current population's (inclusive foreigners) totals 4 million. whose's gonna make up the rest of the numbers? - maybe imported PhD and Masters from neighbouring countries. govt has increased the yearly PR intake.

the authentic heartlanders will be a smaller/less significant fraction when we hit 6 million. plus a cultural shift. its quite crappy to imagine.

Anonymous said...

with same sentiments to annon --"and what kind of welfare do they get when they retire (provided they don't have to work till they die)?"

im curious. i read this from the CPF web:

"if he (someone) chooses to delay his (CPF) payout age to age 90 ... In return, he will get annuity payouts of $560 a month."

i mean...is it logical to wait till you're seconds away from your Maker before gettin some $500?
what can you do with $560 a month when you've hit 90yrs anyway? - buy some cough mixture?

Xtrocious said...

But nothing will beat the hike in ministerial pay coming just before the global recession (or soon to be)!

Anonymous said...

"I thot our Dragon Crown Prince was a 1st class scholar in mathematics ?"

Leadership is not about numbers. It is about managing and inspiring human so that they give their best to live a fruitful life. Obviously, this clown prince only use math to increase his own Lee's assets.

Anonymous said...

If the Gahmen is really serious about the Lifelong Annuity, they should start distributing the budget surplus into CPF account for everyone to kickstart the minimum sum for everybody (to repent for the mistake that they had make). LOL!

Come to think of it, why would anyone want to start withdrawing their monthly payout only when they reach say age 90, 85 or even 80 ?

How many years of quality like can one really enjoy himself/herself like our Mr. & Mrs LKY with that kind of payout in approximately 30 years time?

To a certain extent, the annuity scheme appears to be a bluff on the part of the Gahmen.

Just compare the current purchasing power with that thirty years ago and I'm sure nobody would be better off the longer they delay the payout year.

Anonymous said...

"if he (someone) chooses to delay his (CPF) payout age to age 90 ... In return, he will get annuity payouts of $560 a month."

so government gets to make money out of your CPF money for another 25 years if you decide to delay your payout age to age 90.. how smart of them.

Anonymous said...

To Orange:

CPF is *NOT* welfare! It is merely forced savings and delayed drawn-down. Nobody in Singapore receives handouts when they retire... they are expected to fund their own retirement.

Unless, of course, you work for Administrative Service. Then taxpayers fund your retirement, since you receive a pension.

Anonymous said...

Govt really good at pushing the matters...for eg. "look at hk they are worst...4 times more than expected."
n when its time to increase their salaries...they would say "no, you cant comapre us to ministers ard the world."

its so contradicting, that the govt tend to 'smash a stone onto their feet.' Mr Wang, i tink the 1st explanation seems more logical to me ;-)
n it makes mi lose faith in wat the govt is predicting n the policies they r adopting in future.
this current situaion shown some resemblance to wat PAP MP Tan soon khoon mentioned a few yrs back in parliament...'that there was no need to increase GST' seems like history repeat itself again :P


Anonymous said...

I think with the current situation where the PAP is free to amend any laws they want, there is little we can do. It has to be the RESOLVE of the CITIZENS OF SINGAPORE to THINK very carefully during the next GE to take RISKS and VOTE OPPPOSITION.
Singapore needs to go through a period of PAIN due to the Electorate's Complacency over the last 4 decades. Civil servants(how many are there?) who voted through their rice bowls need to be weaned off their misguided allegiance to the party instead of the STATE(possibly linked to other writer's concept of a 'climate of fear'???).
We need to convince all our friends and acquaintances who are in Civil Service to change this thinking(admit- easier said then done). Only then can the necessary painful process of healing and unravelling all the wrong policies that have been implemented can begin. The risks of not changing this mindset is far greater than the present perpectuating a one party rule that we as citizens(at least those we speak to or on the NET?) seem to think is not working out for us.
Here's a thought for those that don't think we need to change our style of govt.

Sometimes it's Riskier NOT taking Risks.

hugewhaleshark said...

Coder, the HK surplus of HK$115.6b includes proceeds from land sales while your Singapore number does not. I haven't bothered to do the math, but if you include land sales in the Singapore number, you will get a MUCH MUCH BIGGER surplus - the gahmen collected more than S$10b from land sales last year.

Anonymous said...

Now that the issue of the massive surplus has been brought up and many criticism raised, they are trying to diffuse the issue by announcing a freeze in some charges for this year. But don't be too happy about it because come the next round of increases they are going to whack us doubly hard and say that there was no increase this year. It works all the time.

Same with the salary adjustments they made for themselves. During the recession a couple of years ago they talk about minister's salary cuts to convince Singaporeans that they are also bearing the burden. The difference is that in good times they have the luxury of increasing their salary by 20%. Do ordinary Singaporeans have that luxury of choice and increase their salary by 20%? So, we have been had and I think Singaporeans still never learn when the next election comes around.

Anonymous said...

Wow Such an honest mistake could have gooten someone fired in a real corparation if not cover up :)

Anonymous said...

This is really fishy.
Where did all the money......
Maybe thats why they want total control?

Anonymous said...

Hi hugewhaleshark,

Thanks for the head up. Amazing how creative accounting and reporting work hand in hand when the media create comparisons.

The numbers will appear different.

Estimated: -S$0.7b
Announced: S$6.4b
Add land sales*: approx. S$16b

Wondering what other things that are not added into the surplus budget...


*Land sales to generate $9.8b in '08/09
(ST Online, 15 Feb 2008)


"That follows an expected rise of 65 per cent from land sales in the current fiscal year to $10.5 billion.

This beat the government's original estimate for land sales of $3.08 billion when it announced the 2007/08 budget, as the city-state saw a booming property market."


Singapore budget disappoints on tax, sees deficit
(Reuters via Yahoo, 16 Feb 2008)


"Singapore's budget surplus is set to be S$6.4 billion ($4.5 billion) for the fiscal year ending March and is expected to swing to an S$800 million deficit in 2008/2009.

The budget outcome can change from the forecast levels. The 2007/2008 budget had also initially been forecast to be a deficit of S$700 million.

Singapore excludes land sales -- forecast in the budget at S$9.8 billion this coming fiscal year -- but includes one-time cash grants to Singaporeans when calculating its budget."

Anonymous said...

Anon Feb 29, 2008 8.55am.
Hi; I fully agree with You and the only way out for the People of Singapore must lies in the Chinese Saying 'xian si hou sheng' which I can only loosely interpret as: 'the worst must happened before the problem(s) can be solved.

The Voting System will never ever give the voters THE OPPORTUNITY TO CHANGE(REPLACE) the Present Ruler. On the contrary, it is THIS VERY SYSTEM THAT THE PRESENT RULER ENSURE THEIR PERPETUAL HOLD TO THE POWER.

Anonymous said...

/// Tsang estimated the budget surplus would reach a record HK$115.6 billion (US$14.8 billion) in the fiscal year to March, four and a half times the government's forecast and nearly twice as much as last year's figure. ///

HK's forecast was only out by 4.5 times, but it is still in the right direction. Singapore's error was in the direction as well - a huge surplus of $6.45bn compared to a projected deficit of $0.7bn. What is the mathematical error - 7.15 times?

And don't forget that HK does not have an army or defence force. Mindef's expenditure is about $10bn a year. And thrown in, what, another $10 billion in land sales, and our budget will be a humungous 26 odd billion. Should we add in the surpluses from the GLCs as well?

Anonymous said...

Let's hope the surplus does not translate into additional increase in ministers' pay.

With the millions they are earning, I wonder how many of these ministers are staying on in Singapore in their old age or retirement years? Or will they bring their "hard earned" millions to enjoy a lavished lifestyle overseas?

Anonymous said...

no wonder g-men say they are not the god of fortune... they are the fortune suckers.

instead people are the god of fortune disturbing generous ang bao to them.

Anonymous said...

Speaking of Hong Kong...


They're giving the surplus back to the people as well as using it to fund their plans to become the regional wine trading hub...
What are we doing with our 6 billions?

Anonymous said...

Well, they will most probably used it for their increment again or best of all end of this year's bonus. Well, after thinking logically, so far every year they have earned lots of money, but how many % are return to us? If they do not have increment last year, guess what would the 'Honest Mistake' be? They are the ones who is making the poor and rich gap bigger. They are easily the top 20% highest paid in singapore. Yet they give craps about closing up the gap of rich and poor. The commodities in singapore are getting high rising yet they are not using the surplus to subsidise us, this is a great government to be true. And the public transport, water and electricity will definitely be rising again after this financial forecast. SMRT publish such huge articles and announcement in changing of new trains and improving of more service trains are just paving the path for increment this year. And definitely it will be big increment since they are 'doing' so much things for us. Government adds on some more burden by increasing a minimum of 17 ERP gantries. They are just out to squeeze us until we are totally dry and have to support them in future elections because we do not have anymore financial power to support ourselves if we vote for WP. Are we idiots?

Anonymous said...

Mr Wang, expect no explainations.

Remember the NTU Singaporean write to Straits Times ask about the China Scholarship? No replies. What does it means when no reply for someone who will always category reply you point by point to make sure you lose credibility?

This gahmen, take money no explain, give money to foreign also no explain. You ask me no migrate, then how?

Anonymous said...

The Spore Govt is the greatest RENT SEEKER in the world.
Defined under wikipedia, "...rent seeking occurs when an individual, organization or firm seeks to MAKE MONEY by MANIPULATING THE ECONOMIC &/OR LEGAL ENVIRONMENT RATHER THAN BY TRADE & PRODUCTION OF WEALTH. The term comes from the notion of economic rent, but in modern use of the term, RENT SEEKING IS MORE OFTEN ASSOCIATED WITH GOVERNMENT REGULATION AND MISUSE OF GOVERNMENTAL AUTHORITY than with land rents as defined by David Ricardo.
RENT SEEKING generally implies the EXTRACTION OF UNCOMPENSATED VALUE FROM OTHERS WITHOUT MAKING ANY CONTRIBUTION TO PRODUCTIVITY, such as by gaining control of land [COMPULSARY LAND ACQUISITION ACT] and other pre-existing natural resources, or by imposing burdensome regulations or other government decisions that may affect consumers or businesses [COE, ERP, etc].
The Spore economic system based on renk seeking opportunities is geared towards extracting the most from consumers and businesses via indirect taxes, tariffs & govt charges.
Even socially responsible services such as education, public transportation & utilities are run on a profit-making model. That is why when input costs moved up such as oil costs, the total cost went up even higher in Spore than most other countries as public transportation companies & power utilities adjusted upwards to cover their expected profit margins.
The increased govt collection were boosted by a few key factors:-

1.The IR scheme kick off the property boom with stamp duties & development charges rolling into the govt coffers. The subsequent enbloc frenzy also made many millionaires & also enriched the govt via stamp duty paid. However, with only 15% of Sporeans owning private properties, it was a narrow group of individuals striking this windfall. The 85% HDB dwellers are not privy to this windfall.

2.The public listed companies started making good profits which then drove the stockmarket upwards. While public listed companies were making profits, the small, private companies barely made profits with a lukewarm domestic economy plagued by escalating costs - a tale of 2 cities.

3. The 2% GST increase also added to govt revenues as the Spore economy is already basic domestic consumption at the lowest level. There is very little opportunity to trade further downwards. That is why when the govt asked people to buy cheaper house brands to reduce their living costs, they sounded very out-of-touch akin to "let them eat cake if bread is expensive" attitude - The people already are buying house brands but still find it difficult to stretch their budget.

3. The slew of bus/MRT fare increases approved by PTC, greater ERP gantries being set up, higher fuel ad valorem taxes collected led to higher transport costs. This is also unavoidable as there are no better alternatives. The COE remained stagnant but it was because the car population went up 7-8% p.a. against the stated 5% projected growth. Total COE revenue collected went up due to the greater numbers.

4. The better economy drove up the demand for foreign workers eg. construction, services & maids. With foreign workers levy, worker's permits, etc., MOM collected massive amounts of money from this sector.
The govt system is geared to collect massive inflows for reinvestments by GIC & Temasek. However, with Shin Corporation's debacle, I'm a little wary of how the money is being invested & whether the money could be recovered! UBS & Merrill Lynch bailout by our Sovereign Wealth Funds (SWF) also looks very iffy!