<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Oct 24, 2008
BOUQUET
</TR><!-- headline one : start --><TR>Wise to review rules on reserves
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->FINANCE Minister Tharman Shanmugaratnam's proposal to review the rules on spending the country's reserves is timely and welcome. With the spotlight on the DBS debacle and looming recession, both real and immediate concerns, this long-term issue may not get the same publicity and should be explained more clearly.
The rules of tapping capital gain based on a long-term forward view of total returns seem sensible. However, is this akin to planning to spend money one has not yet earned? It seems like a credit card situation, where one plans to spend money one will most likely earn in the future. This should be made clear, with the risks involved.
Second, if spending is based on real returns, does this mean we may not have any income in some years when investments are not profitable? This would most likely happen during bad economic times when the poor need more help. Is there a danger of the Government selling assets to realise revenue - which, in today's scenario, would not be possible if we did not tap capital gains?
Lastly, whilst looking for more avenues to boost revenue, shouldn't we also look at whether we have been spending wisely? Spending a few thousand dollars to create a koi pond in a school enhancement programme, for example, just does not seem very wise. Are we trying to plan to spend more when we are not spending wisely in the first place?
Tavence Kang <!-- end of for each --><!-- Current Ratings : start --><!-- Current Ratings : end --><!-- vbbintegration : start -->
BOUQUET
</TR><!-- headline one : start --><TR>Wise to review rules on reserves
</TR><!-- headline one : end --><!-- show image if available --></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->FINANCE Minister Tharman Shanmugaratnam's proposal to review the rules on spending the country's reserves is timely and welcome. With the spotlight on the DBS debacle and looming recession, both real and immediate concerns, this long-term issue may not get the same publicity and should be explained more clearly.
The rules of tapping capital gain based on a long-term forward view of total returns seem sensible. However, is this akin to planning to spend money one has not yet earned? It seems like a credit card situation, where one plans to spend money one will most likely earn in the future. This should be made clear, with the risks involved.
Second, if spending is based on real returns, does this mean we may not have any income in some years when investments are not profitable? This would most likely happen during bad economic times when the poor need more help. Is there a danger of the Government selling assets to realise revenue - which, in today's scenario, would not be possible if we did not tap capital gains?
Lastly, whilst looking for more avenues to boost revenue, shouldn't we also look at whether we have been spending wisely? Spending a few thousand dollars to create a koi pond in a school enhancement programme, for example, just does not seem very wise. Are we trying to plan to spend more when we are not spending wisely in the first place?
Tavence Kang <!-- end of for each --><!-- Current Ratings : start --><!-- Current Ratings : end --><!-- vbbintegration : start -->
