IMPACT OF RISING INFLATION ON PLANNED GST INCREASE AND RELATED FINANCIAL OFFSET MEASURES

MP Pritam Singh

Mr Pritam Singh (Aljunied): Sir, I have two questions for the Minister for Finance. First, an article in The Business Times in May this year, citing Singapore’s Department of Statistics data, confirmed that the Government’s tax collections for fiscal year 2021 was $74.76 billion, a 10.5%-increase compared to the pre-COVID-19 fiscal year 2019, of about $67 billion.

The same article notes that stamp duty collection was 61% higher over the same period, hitting $6.7 billion for fiscal year 2021, ending March this year.

In light of this information, can I understand what is the Minister’s assessment of the Government’s current fiscal position and how much fiscal room it has to introduce more cost of living support measures for the lower- and middle-income end of Singapore, particularly families and small businesses?

Secondly and connected to the first question, in light of elevated fuel prices, has the Government considered the prospect of a more acutely targeted and temporary road tax rebate, similar to that introduced in 2015 and 2021, to assist Singaporean households, that for various reasons, need a vehicle for family use and due to historically high COE prices, as an example, cannot make the green transition to less pollutive electric vehicles (EVs) at this point in time.

I understand the previous policy explanation for road tax rebate was to offset the Government’s decision to raise fuel taxes. However, in view of high pump prices today, would the Government consider some targeted financial relief for those who drive cars and motorcycles below a certain engine capacity and whose assessable income is below the median salary range, for example, because of inflation today?

Mr Lawrence Wong: Sir, we had indeed enjoyed some fiscal upsides in our projections. On the revenue side, these are largely once-off upsides due to higher-than-expected collections with regard to property and vehicle transactions. These are sentiment-based transactions. We can in no way count on them to happen year after year and certainly, we cannot rely on them to fund our longer-term recurrent and structural spending increases.

But we did enjoy this upside this year and on the expenditure side, it so turned out, fortunately, for us that Omicron was milder than we had expected and so we had some savings on the spending side. And that was exactly why – because of both the revenue and expenditure savings – we were able to mount this recent $1.5 billion package within our current budget, within our current means. So, we are fortunate in that regard but let us not count on these one-off instances to fund our longer-term structural spending increases.

On the second point, we had designed the $1.5 billion package precisely to help lower-income households, families, workers, as well as the more vulnerable groups. And we were very mindful that there are people who rely heavily on their vehicles for a livelihood, which is why we provided specific help for them, targeted help through the NTUC U FSE Relief Fund, as well as for taxi drivers and private hire car drivers.

So, that will be our approach, the general approach we take, as I have explained before. It will be very hard for the Government to shield businesses, workers directly from these cost increases which are externally induced. But what we will try very hard to do is to provide short-term relief and in the process of providing that relief, we will also want to encourage businesses, families, individuals, wherever possible, to become more energy efficient, for businesses to become more productive, so that even as we navigate through the immediate crisis, we will emerge stronger, greener and more productive and therefore better prepared for the challenges before us in a new environment.

Ministry of Finance
4 July 2022

https://sprs.parl.gov.sg/search/sprs3topic?reportid=oral-answer-2840

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