Assoc Prof Jamus Jerome Lim (Sengkang): Thank you, Mdm Deputy Speaker. I just wanted to clarify a few points. And I understand that by peppering Minister Tan with more questions, we might end up making him yet more thirsty, but it is important, I think, to get some of the points that we made right.
I will start off by pointing out that I wonder whether he could clarify where he thinks there is such a large philosophical difference between our particular approach of raising revenue relative to that of the Government. I say this because, if you look at the four levers that we have described, only one of these – what we had called “the wealth tax” lever – actually approaches the high-income, high net worth individuals. And even within that particular scenario, we had made very modest recovery assumptions, amounting to something in the order of $1.2 billion on wealth taxes alone.
Of course, the hole is $3.5 billion and so, it is important to understand that the rest of that hole would have been met by much more broad base forms of taxation. Similarly, for the corporate taxation lever, when we made that proposal about raising the rate of corporate taxation to what would be compliant with the OECD Base Erosion and Profit Shifting (BEPS) agreement, we also made very clear that the target of that would be the multinational firms and not the small and medium enterprises.
Keeping with that particular scenario, we would have kept the corporate taxation rate on them at the effective rate of 3% or so.
The reason why I think it is important to clarify that we are not philosophically seeking a very narrow tax base. We are, in fact, seeking alternative revenue levers that subscribe to the general principles of public finance, which are, as much as possible, to spread the revenue schemes in as broad a manner as possible.
But at the same time, recognising the importance, as suggested by Minister Wong in his speech, of a certain degree of fairness and equity, and that is precisely why we have some components, in fact, one third of one of our four levers, where we do include wealth taxation. I hope that clarifies and perhaps Minister Tan can clarify a little more.
Mdm Deputy Speaker: Minister Tan.
Dr Tan See Leng: Again, I thank Prof Lim as well as the Leader of the Opposition for their concerns. I am fine to take any number of questions and happy to engage because it is also good to clarify the points. As I have shared earlier on, in my speech, what the impression that we have taken in terms of where you have decided to load this is on the wealth tax portion, which seems to put a huge burden on a certain very small group of Singaporeans, and I question its sustainability.
And hence, if you noticed that in my speech, I said consequentially, this will eventually end up having to be more spread out, in terms of having to be borne by more people.
In terms of the philosophical differences, therefore my point to perhaps Assoc Prof Lim and the Workers’ Party is that: do they now, having heard our explanation, decide that they support the GST hike and support the Budget.
The other point is that Minister Wong will address a number of your points in his round-up speech tomorrow.
1 March 2022