Tuesday, June 7, 2011

Household Per Capita Income is a better gauge

Currently, household income is being used as a gauge for distributing any "goodies" to Singaporeans every budget year. However, I find that the usage of this measurement indirectly caused a problem. Singaporeans are now choosing the type of HDB flats based on the "goodies" they may receive from the budget. The kiasu mentality has set in.

Therefore, I feel that the best way to "throw one stone at 2 birds" is to remove this measurement for household goodies. Instead, Household Per Capita Income is a better gauge of the household income and should be used instead. Basically, household per capita income will measure the income based on the number of people in the household for the particular flat. For example, if your household consists of 2 people earning a total of $5,000, the per capita income will be $2,500.

This will remove the incentive for couples to choose the HDB flat size based on the goodies they are able to get, and to even out the demand for HDB flats. This measurement is also more fair as it takes into account the number of the people being supported by the household income, especially useful if you have school going children or your parents stay with you.

I do not see the point in tiering by the annual value of your house because it is not the correct representative of your income. I do not have the statistics for household income, but I believe that based on the information collected, the government should not have any problems tiering the goodies. A simple goodies tier can be as follows:
  • $800: $0 - $1,000 per HDB household capita income
  • $600: $1,001 - $2,000 per HDB household capita income
  • $400: $2,001 - $3,000 per HDB household capita income
  • $200: >$3,000 per household capita income (others)
  • +$100: NSF

Something to think about...

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