SINGAPORE: The planned increase in the Goods and Services Tax (GST), the country’s fiscal sustainability and the redistribution of surpluses to manage income disparity were among the key topics raised by Mr Liang Eng Hwa, an MP for Holland-Bukit Timah GRC, in Parliament on Tuesday (Feb 27).
Mr Liang, who is also chairman of the Government Parliamentary Committee (GPC) for Finance as well as Trade and Industry, kicked off the debate on Budget 2018, which was announced last week by Finance Minister Heng Swee Keat.
On the GST hike, Mr Liang, said the timing “should not come as a surprise” as both the current and the previous finance ministers have made it quite clear that Singapore has sufficient revenue to meet the increased expenditures for this term of the Government.
“So, this increase in GST is not a deferred tax. It is meant to take care of future spending increases beyond 2020,” he said.
The announcement of the hike way before the implementation will allow Singaporeans and businesses to better prepare for the increases. It will also give the Government time to work on offsets schemes to further enhance the progressivity of our GST system, he added.
He also explained why he thinks that the spending of the Net Investment Returns (NIR) at 50 per cent remains a “fair balance between current and future generations”.
AdvertisementAdvertisementUnder the NIR framework, the Government can spend up to half of the expected long-term investment returns generated by the Monetary Authority of Singapore, Temasek Holdings and GIC.
“Over the last 10 years, the NIR contributions of past Budgets have added up to more than S$100 billion. Imagine us not having NIR contributions or much lesser NIRC, our spending and subsidies of programs would have been much lower and/or we may have to raise even higher taxes,” he said.
Referring to suggestions to increase the spending of the NIR to above 50 per cent for future expenditure, Mr Liang said: “It is always tempting to go for the short-term painless solution. Our forefathers were resolute in not taking that easy path and so should us.
“Rather than use more of the returns for current spending, we should let the power of compounding returns do the work by re-investing the other 50 per cent so as to grow the principal amount of the reserves and contribute to bigger value of the NIRC in the future,” he added.
Mr Liang also expressed hope that the Government do more to affirm surplus re-distribution arrangement as part of Singapore’s social compact. “Besides helping to mitigate the impact of GST and rising costs, it can also to help manage the income disparity that we see widening in our society,” he said.
One of the highlights of Budget 2018 was an “SG Bonus”, where part of the expected FY2017 budget surplus of S$9.6 billion will be “shared” with Singaporeans aged 21 years and above in 2018. They will receive S$100 to S$300, depending on their income, in a payout costing the Government S$700 million.
Mr Liang noted that in years where the country has done well, the Government should be targeted in distributing the surpluses to low and middle income groups. “This would give Singaporeans a sense that everyone has a stake in this country and we are all aligned to work for the betterment of Singapore,” he said.
The Budget debate will be followed by the Committee of Supply debates, which will end on Mar 9.
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