Fair System Of Income, Annual Value As Criteria In Place

I refer to Mr Paul Chan’s letter (“Income more relevant than Annual Value” 31 July 2013).
 
Government help schemes such as the GST Voucher (GSTV) aim to provide support to those who are less well-off. They use both Assessable Income (AI) and  the Annual Value (AV) of homes as criteria,  as this combination provides a better picture of a person’s means than if just one criterion is used.

To address one of Mr Chan’s points, the AV does not refer to actual rental income earned, which would be reflected in the AI.  The AV is a measure of the value of the home, irrespective of whether it is rented out. Besides a person’s income, this is an additional measure of how well-off he is.

Most Singaporeans with lower incomes do obtain larger GSTV benefits. This includes for example the majority of non-working spouses, who rightly benefit from the GSTV. However if GSTV benefits were based on AI alone,  those who live in expensive homes and who choose not to work would obtain the same benefits as the poor.  

Similarly, using AV alone would mean that Singaporeans who earn high incomes, but who choose to live in flats with lower AVs, would benefit unduly.

Our approach of using both AI and AV as criteria is  a practical way of identifying those who are less well-off, from among the full population of adult Singaporeans. It is not perfect in design, but broadly equitable.  It also complements other schemes which are less broad-based and allow for more customised assessment of an individual’s needs.

We will continue to review the eligibility criteria of government help schemes to benefit those who need greater support.

Lim Bee Khim (Ms)
Director, Corporate Communications
Ministry of Finance