Singapore's 2018 Budget: Managing the Economy and Funding Social Spending

Key Functions of Government in Managing a Country and Its Economy

Presenting Singapore’s 2018 Budget in Parliament, Finance Minister Heng Swee Keat announced that the GST (Good & Services Tax) rate would be raised from the current 7% to 9% sometime between 2021 and 2025. Mr Heng explained that the rate change was needed to fund expected increases in healthcare, security, and other social spending. Refer to the following references for background. ? Heng, Swee Keat (2018, February 19). “Budget 2018: Together, A Better Future”. Retrieved from:il 30). “Balancing social spending with financial prudence”. The Straits Times. Retrieved from:This assignment requires you to consider the planned GST increase against the broader context of the government’s management of Singapore’s various national needs, ranging from growing the economy to providing social support. a) Using concepts from the social and behavioural sciences, identify two key functions of a government in managing a country and its economy. (20 marks) b) Explain, from the government’s perspective, why the GST increase would be necessary, and then identify two common objections to the planned increase that have been publicly voiced. (40 marks) c) Present the steps the government plans to take to cushion the impact of the GST increase on Singaporean individuals and households. Thereafter, discuss whether greater state spending means Singapore is moving towards a more socialist model of governance. (40 marks) Section (a) requires you to begin by considering what are the typical key functions of a government in managing a country and its economy. You can set the response in a local perspective and highlight what you assess are more critical functions undertaken by the Singapore government. ? Section (b) then requires you to outline the government’s stated rationale for increasing the GST rate in Singapore. Thereafter, you should consider some of the common lines of critique against the planned GST increase, which have emerged over the past few years, and sum up TWO (2) main objections that have been publicly raised. The objections could have been raised by members of the public, by Members of Parliament, or by analysts and economists. ? Having established why the government plans to raise the GST rate, as well as identified two key objections against this impending move, Section (c) requires you to consider how the government intends to cushion the impact of the GST increase on people in Singapore. What measures or policy stances have been announced to this end? Relevant research from proper secondary sources, such as newspaper reports or content from official websites, would be needed for this section. ? In conclusion, you should briefly consider whether the move by the Government to raise the GST to fund increased state spending implies that the country is moving towards a more socialist direction. ? For all three sections, you are strongly encouraged to provide relevant examples, where possible, to illustrate or substantiate your arguments and points. Responses without relevant examples are less likely to be persuasive