Personal Suggestion

AN INDIAN UWC HIGH SCHOOL STUDENT BROUGHT UP IN SINGAPORE, SUGGESTS BASED ON FACTS THE FOLLOWING:

Singapore has already tried to solve this issue. Its policies are the norm when it comes to reducing income inequality. However, I also believe that it has been avoiding extending and implementing some policies as it would start to affect the higher income earners more than what they would deem comfortable. For example, a common thought is to increase progressive taxation. I do not agree with this, and I know this is a contrarian view, but I believe that this would be harmful to the economy. Increasing tax results in lower disposable income for consumers to spend in the economy. This could lead to a slow down which is not what the Singaporean government is preparing for. It has invested over a billion Singapore dollars at the start of 2017 in construction projects including renovating HDB’s and building more community centers and so on. Another view is that increasing taxes would help the government pay off its external debt of USD 1.7 trillion.

Moreover, there is a high chance that increasing taxation on higher income expats will encourage them to leave and possible migrants to stay away. Singapore has relied on this for so long and their unique complicated cycle has worked for them, so it would seem pointless to change it for an outcome that other solutions could solve.

One thing I do believe in is implementing more social benefits for the needy. I understand that this would have an opportunity cost but as the numbers receiving would be low, it may not be that high. A more thorough examination process would be needed to see who would be able to qualify for larger benefit programs. This would employ more people, but could also lead to be an inefficient allocation of resources. Another problem would be that some citizens are just unwilling or too embarrassed to take up government help. The government has responded by putting out media campaigns to erase this stigma.

Conclusively, it is difficult to find a solution that manages to keep society happy and the economy fruitful as there are many factors to consider and prepare for.