Workers’ Party says nay to GST hike: Pritam Singh
The Workers’ Party is against the impending Goods and Services Tax hike, and its assistant secretary-general Pritam Singh has called on the Government to tap on revenue from land sales to fund recurrent spending. TODAY file photo
SINGAPORE — The Workers’ Party (WP) is against the impending Goods and Services Tax (GST) hike, and its assistant secretary-general Pritam Singh has called on the Government to tap on revenue from land sales to fund recurrent spending.
Speaking in Parliament on the first day of the Budget debate on Tuesday (Feb 27), Mr Singh said the party is unable to support the hike “at this moment in time” given the lack of further details on how other forms of tax will add to the Government’s income.
“It is no secret that Singapore’s approach to budgeting is highly conservative and land sales are excluded from the Government’s income,” said Mr Singh.
The Member of Parliament (MP) for Aljunied GRC added that reasonable Singaporeans will think there is scope to consider how elderly Singaporeans can better protected in their twilight years, including holding off additional taxes like the GST for as long as possible. GST is expected to increase from the current 7 per cent to 9 per cent sometime between 2021 and 2025.
“One novel, if not relatively radical approach in view of the current orthodoxy is to reconsider the role land sales can play in recurrent spending,” said Mr Singh, who has been tipped as the next WP chief after party chief Low Thia Khiang steps down.
Currently, land sales revenue is excluded from budgetary spending. Under the Constitution, state land and revenues from land sales form part of Singapore’s past reserves, which are invested. In FY2017, proceeds from government land sales came up to S$12.9 billion (2.9 per cent of GDP), higher than the forecasted S$8.2 billion.
Mr Singh said the majority of the land here consists of 99-year or less leasehold properties. The Government, which is the largest landowner in Singapore, should allow current generations to benefit from some percentage of land sales today since “such land regenerates itself in value for future generations providing successive governments with a recurring source of income”, he added.
Land is highly valued here, and land sales are likely to be very healthy in the decades to come, he said. For instance, when the port facilities move out of Tanjong Pagar, or when Paya Lebar airport relocates, these plots of land will be available for sale to the Government of the day.
Mr Singh also addressed arguments against the use of land sales for budgetary spending, one of which is that excluding land sales prevents the Government from unnecessarily selling land to meet expenditure needs.
A cap on spending revenue from land sales can be introduced, such as capping it at 20 per cent of the value of average land sales over 20 years, he suggested. “This would give no good reason for an ill-advised Government to ramp up land sales...to increase its own income,” he added.
Another argument was that income from land sales are invested, and already available for Government spending through the net investment returns contribution (NIRC). But Mr Singh said it would be more transparent to separate the income from land sales with other reserves for investment. It would also mitigate the consequences of poor investment decisions, he added.
Former People’s Action Party MP Inderjit Singh also told TODAY last week that the Government can tap into Singapore’s past reserves through revenue from land sales. He said then: “The government owns land and assets that are worth much more than what GIC and Temasek own. The net income from the sales of land is quite substantial and if the Government also adds this to the NIRC, I believe there should be sufficient income to spend in the foreseeable future.”
On Tuesday, Mr Pritam Singh said that while GST may have to rise, Singaporeans are more likely to accept it if the Government considers the pros and cons of moving from established practices, and new approaches that can improve social protection thresholds for all.
He added that there is also “inconsistency in the treatment” of some of the additional taxes that will add to the Government’s revenue. For instance, he said there are no estimates on the additional revenue that will come from the inclusion of GST on imported services, even though it was stated that the Government expects to collect a carbon tax revenue of almost S$1 billion over the first five years.
Likewise, Singapore will become more efficient at collecting tax with the push to be a Smart Nation, while sectors that have “traditionally been thought to under-declare the income” will contribute more in taxes with more electronic transactions.
Mr Singh said: “In view of the absence of such details, the Workers’ Party is unable to support the announcement of a GST hike at this moment in time. This is because of the lack of clarity surrounding projected expenditure when the Government raises GST in future, and the relative lack of information on whether there is scope for the reserves to better support Singaporeans.”
MP for Mountbatten Lim Biow Chuan, however, cautioned against Mr Singh’s suggestions. He said that once the land is sold, the asset is gone, and that tapping on revenue from the land sales would also take money away from the reserves.
This prompted a clarification from MP for Aljunied Sylvia Lim, who is chairman of WP, who said the Government’s definition of land sales includes land that are sold on leases.
Non-constituency MP Leon Perera also raised two questions during Tuesday’s debate, as he asked why was there a need to lower tax exemptions for startups from 100 per cent for the first S$100,000 of normal chargeable income to 75 per cent. He also asked why the gig economy was not mentioned during the Budget, how the Government views it, and the broad thrusts of policies for the sector.
