WP tax proposals would potentially 'squeeze anyone who does well, from the middle-income upwards': Tan See Leng
Workers' Party chief Pritam Singh said the Manpower Minister's understanding of the party's proposals is incorrect.
SINGAPORE: The Workers’ Party’s (WP) opposition to raising the Goods and Services Tax (GST) to pay for social initiatives – and its alternate tax proposals – would mean more people, including middle-income earners, paying more tax, said Manpower Minister Tan See Leng on Tuesday (Mar 1).
He was speaking in Parliament a day after the WP said they would object to Budget 2022 because of the Government’s decision to raise the GST.
Dr Tan said that while the WP accepts that greater spending is needed to fund government moves shoring up the social compact, the party is, at the same time, disagreeing with how such funds should be raised.
“(What) they oppose is how we intend to do the difficult thing – and that is to raise the revenues to pay for all the good things that they like so much that they want even more.”
He pointed out that the WP’s suggestion to do away with the GST hike would result in a S$3.5 billion revenue shortfall.
And while the WP suggested increasing personal income tax and property tax further, it would not be possible to get this full amount “by loading it all on those just at the very top”.
Dr Tan said it was “not possible to have extremely punitive taxes on just the top 1 per cent or the 5 per cent”.
The consequence would be that income tax hikes would have to “percolate” down to the middle- and upper-middle income households.
Higher property taxes would also have to be applied to a larger base of properties, he said.
"Not just the luxury condos and landed properties which will already see a significant increase – but it will also go to all condos, (executive condominiums) and perhaps eventually, even larger HDB flats.
“Residents from across the island … will all be hit. These are the people who may have to make up the difference.”
He added: “(The WP’s proposals) will ultimately result in a system where our approach to revenue is just to squeeze anyone who does well, from the middle-income upwards, potentially.
“Where we tell Singaporeans: ‘Look, there’s someone better off who can afford to take on all of the burden, you don’t have to put in your fair share.’ That is not good nor is it sustainable for our social compact.”
Dr Tan added that if the Government takes the WP's approach, it will have to increasingly shift and raise the tax burden onto the middle class – which will also "feel betrayed".
"That, I believe, is the surest way to unravel and destroy our social compact and trust in our society, and Singapore will not hold together."
TAN’S UNDERSTANDING INCORRECT: PRITAM SINGH
Leader of the Opposition and WP chief Pritam Singh said he disagreed with Dr Tan’s characteristion of the WP proposals.
Mr Singh said: “How do you balance things in a manner which is more equitable for society going forward for a fairer, more sustainable and more inclusive society? I think that's the thrust of what the Workers’ Party had put forward.”
He added that a Business Times article had pointed out that Singapore may gain in tax revenue following a global move - known as the Base Erosion and Profit Shifting (BEPS 2.0) initiative - to introduce a standardised minimum corporate tax rate.
“So I think in the spirit of seeking a more equitable tax distribution amongst various segments of society, I think the Workers’ Party is fully entitled to raise alternate forms of revenue, which we have, so I disagree with the minister's characterisation.”
Member of Parliament Jamus Lim (WP-Sengkang) asked Dr Tan why he thought there was “such a large philosophical difference” between the Government and the WP’s approach to raising revenue.
“I say this because if you look at the four levers that we described, only one of these, what we had called the wealth tax lever, actually approaches the high income, high net-worth individuals,” he said.
And in that scenario, the WP had made “very modest” assumptions that revenue from wealth taxes could amount to S$1.2 billion, he said, adding that the rest could be met by more broad-based taxation.
Associate Professor Lim added that the party was “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 .. have a certain degree of fairness and equity.”
Dr Tan reiterated that the Government’s impression is that the WP’s approach is to load a “huge burden” on a small group of Singaporeans, which will end up having to be borne by more people.
As the discussion wrapped up, Mr Singh said: “The understanding that he had of the WP’s alternate proposals are incorrect and we will clarify in the course of the (Finance Minister's) wrap-up speech, depending on what (he) says.”