Singapore to use 'sin taxes' to pay for health care for elderly

Singapore announced steep increases in alcohol, gambling and tobacco taxes as it pledged billions of dollars in health care subsidies for its growing ranks of elderly citizens.

Alcohol taxes will rise 25 per cent, while duties on tobacco will jump 10 per cent. Betting duties from the state-linked betting firm Singapore Pools will rise to 30 per cent from 25 per cent of gross bets from July.

In his budget speech on Friday, Finance Minister Tharman Shanmugaratnam also unveiled a S$9 billion (HK$55 billion) package to provide life-long health care for the elderly.

Under the plan, about 450,000 senior citizens who are part of what the government terms the "pioneer generation" - those over 65 - will benefit from a host of medical benefits including for outpatient specialist care and medical insurance.

Affluent Singapore has one of the world's most rapidly ageing populations due to falling birth rates and longer lifespans. Officials say 20 per cent of Singaporeans will be 65 or older by 2030.

"These special benefits that we are providing the pioneer generation will not be differentiated by income because our objective is to honour the contributions of this whole generation," Tharman said.

Eugene Tan, an associate law professor at the Singapore Management University, said raising revenue through "sin" taxes would be seen by Singaporeans as a better alternative to increases in personal or corporate tax rates.