SINGAPORE: Singapore needs to “preserve fiscal sustainability”, said Finance Minister Heng Swee Keat on Tuesday (Dec 5).
Speaking at the Straits Times Global Outlook Forum 2018, Mr Heng said this is necessary to develop an adaptable and innovative economy, nurture a caring and strong society and keep the country secure and resilient amid the “unpredictable and complex changes” ahead.
“This is about staying responsible and spending within our means. As expenditure increases and revenue growth slows, we must think of ways to manage expenditures and raise revenues.”
Mr Heng said the ability of the Government to sustain its current spending, tax and other policies in the long run without threatening government solvency or defaulting on its liabilities or promised expenditures, also means the country must ready herself for revenue risks in light of technological changes and evolving business models.
“Our system must remain pro-growth. Our overall system of taxes and transfers must remain fair and progressive. We must keep our revenue base diversified.”
During the People’s Action Party convention on Nov 19, Prime Minister Lee Hsien Loong had said that Singapore will be raising its taxes, as government spending on investments and social services grows.
PM Lee stressed during the convention that Minister Heng was right when he said during his Budget speech earlier this year that “raising taxes is not a matter of whether, but when”.
PM Lee also went on to say that the Government needs to plan ahead, as well as “explain to Singaporeans what the money is needed for, and how the money we earn and we spend will benefit everyone, young and old".
Meanwhile, Mr Heng stressed during the forum that good governance remains crucial in the private, public and people sectors.
“We need to maintain a high level of trust, and do so by communicating our considerations, our challenges and our plans frankly and honestly.”
“The consequences if we fail to do so are severe – loss of trust, a divided people, a society that turns inwards from the world and loses its ability to adapt and innovate.”
"FOR WHATEVER I CAN, I WILL DO THE RESPONSIBLE THING": HENG
When asked in a question-and-answer session about whether to raise taxes because of fiscal prudence instead of using Singapore’s reserves, Mr Heng said he would be “very cautious about making statements about how big our reserves are”.
Said Mr Heng: “Because at the end of the day, having the reserves gives a long-term stability to our economy and gives us the means to be able to weather (a) crisis in ways in which many other countries cannot, and increasingly in a world which is more uncertain, I think we better have more firepower than less.
“In fact when the economy had a downturn, we used the reserves to provide for that buffer. So I say never take it for granted. And if I can, I’d rather leave something for the future generations that their future is more secure.”
Mr Heng added: “Fifteen years from now, it’s going to be a completely different demographic in Singapore ... If we don’t prepare for that I think we will come to regret it and I want to make sure for whatever I can, I will do the responsible thing.”