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Singapore mulls higher taxes, effective spending
SINGAPORE: Singapore’s budget will likely be challenging for a number of years as officials look to balance fiscal sustainability with generous aid amid a long recovery, and signalled that higher taxes may be on the line.
Operating revenues this financial year will probably be 16% lower than the government estimated in February, Deputy Prime Minister Heng Swee Keat said in an address to Parliament yesterday.
That’ll mean less money coming in, even as the government pledged to spend to help households and businesses during what’s set to be the worst recession since independence.“We expect our revenue position to be weak for a number of years, as the effects of Covid-19 on the global economy linger, and our economy slows,” said Heng, who is also the finance minister.
“We will have to find ways to fund these sustainably – higher taxes, and more effective spending.”
Singapore has pledged about S$100bil (US$73.4bil) in stimulus measures to fight the effects of the pandemic, separated in five announcements through mid-August that included wage subsidies, digital transformation initiatives, re-skilling operations and cash grants.
At the time of the last announcement, the government projected a budget deficit of S$74.2bil for this fiscal year after earning presidential approval to draw some S$52bil from past reserves to fund the virus aid.
Heng said yesterday that the total draw on past reserves remains around that amount.
The fiscally conservative city-state tapped its reserves this year for the first time since 2009, raising questions about how quickly officials will feel the need to refill those coffers – and when a planned increase in the goods and services tax will take place, after the government said it wouldn’t happen next year.
Heng on yesterday acknowledged that Singapore is unique in not racking up debt, compared with governments worldwide whose trillions of dollars in pandemic-related stimulus are straining budgets and credit ratings. But he also struck a tone of fiscal responsibility.
“We must have the discipline to start earning, saving, and investing for the future again,” he said. — Bloomberg
Source: https://www.thestar.com.my/business/business-news/2020/10/06/singapore-mulls-higher-taxes-effective-spending