Planning for future needs now is the ‘responsible’ route to take: Heng Swee Keat
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SINGAPORE — The country’s finances are in a healthy position, but the authorities need to plan ahead while it is in a position of strength, Finance Minister Heng Swee Keat said on Thursday (March 2) as he wrapped up the three-day Budget debate.
Speaking in Parliament, Mr Heng said that the “right and responsible way” is for the Government to plan early while its finances are sound, and not to leave future government leaders to deal with the problem when Singapore comes under fiscal strain.
“Planning for (our) future needs now will allow us to better ease in the needed measures to give our people and businesses some time to adjust. We must plan for the long term, not five years, not 10 years, but big ambitious plans for the decades ahead,” he added.
On Wednesday, Mr Chan Chun Sing, Minister in the Prime Minister’s Office, had told the House that Singapore is “living on the income of our savings”. This year’s Budget of about S$70 billion is supported partly by about S$14 billion in Net Investment Returns Contribution (NIRC) derived from the reserves — the biggest of the Government’s top revenue streams.
On Thursday, Member of Parliament (MP) Sun Xueling raised concerns over the inherent risks from the Budget’s reliance on the NIRC, and Mr Heng said that there are several safeguards in their spending rules.
This includes how spending is based on expected long-term rate of returns that does not depend on year-to-year market fluctuations, for instance.
“We have to be very, very careful in guarding the use of these reserves and making sure that we spend on a sustainable basis,” he added.
On the Government’s plans to raise revenues through new taxes or higher tax rates to meet growing needs, Mr Heng said that this challenge is not unique to Singapore and that many other cities, such as Hong Kong, are doing the same.
He assured the House that the tax system here would continue to be “fair and sustainable”.
“First, our tax system must be fair and progressive across income groups. What this means is that those who are better off must contribute more … Second, a sustainable tax system is fundamentally one that rewards efforts by individuals and enterprise by our companies.”
Pointing out that a healthy and growing economy is needed to sustain a healthy revenue stream, he said that countries such as the United Kingdom and United States have announced their intention to lower their corporate income tax rates, and Singapore must ensure that it remains “an attractive place to work and do business” to have a thriving and vibrant economy.
Mr Heng stressed that any decision to raise taxes would not be taken lightly and the Government would study all options carefully.
