Deputy Prime Minister Lawrence Wong defended Singapore’s low tax burden and tight fiscal position in his closing speech on Budget 2023 debate in Parliament on February 24. He emphasized the need for Singapore to proceed with a second Goods and Services Tax (GST) raise in 2024 to take care of the growing number of seniors.
Singapore’s low tax burden
Singapore’s tax to GDP ratio is considerably lower at 14% compared to other advanced economies. This low tax burden rewards hard work and enterprise, allowing people and businesses to keep most of what they earn.
Alternative methods of increasing government revenue
Opposition parties suggested alternative revenue streams, including wealth taxes, corporate tax, and land sales revenue. However, Mr Wong stated that a mix of taxes on income, consumption and assets is necessary to provide sound and stable public finances in Singapore. Wealth taxes are hard to implement in practice, corporate tax is facing competition, and treating land sales proceeds as revenue divided over lease periods would unlikely generate more revenue than what Singapore is already getting today.
The need for social mobility and tackling inequality
In his opening speech on Wednesday, the Leader of the Opposition, Pritam Singh, had warned of “two Singapores” emerging in the absence of more action against inequality. In his closing speech on Friday, Mr Wong addressed the call for more to be done to tackle inequality. To ensure sustainable growth in real wages for lower-wage workers, Singaporeans need to chip in by paying more for services delivered by their fellow Singaporeans.
Conclusion
Singapore’s Deputy Prime Minister Lawrence Wong defended the GST increase and emphasized the need for a mix of taxes on income, consumption, and assets to provide sound and stable public finances in Singapore. He also addressed the call for more to be done to tackle inequality and ensure social mobility remains “alive and well.”
