SINGAPORE – Singapore collected more taxes and saved more money last year than originally projected, which is precisely why the Government was able to mount the recent $1.5 billion support package to help people cope with inflation, and fund it from its current budget, said Deputy Prime Minister and Finance Minister Lawrence Wong on Monday (July 4).
But it cannot count on these one-off instances to fund the structural spending increases expected in the longer term as Singapore’s population ages and healthcare costs go up, he told Parliament.
Mr Wong was responding to Leader of the Opposition and Workers’ Party chief Pritam Singh (Aljunied GRC), who asked about the Government’s current fiscal position and whether there might be room to provide more financial help for lower and middle income families squeezed by the rising cost of living.
Mr Singh pointed out that the Government had collected even more revenue in the 2021 fiscal year than the 2019 fiscal year before the Covid-19 pandemic struck.
Specifically, tax revenue came up to $74.76 billion last year, 10.5 per cent higher compared to the $67 billion in 2019, and stamp duty collection hit $6.7 billion in the last fiscal year, 61 per cent higher than in 2019, said Mr Singh.
Acknowledging this, Mr Wong said the higher revenue collected was largely due to property and vehicle transactions, which are sentiment-based and may not happen year after year, while the lower spending was due in some way to fortune as the Covid-19 Omicron wave turned out milder than expected.
“Let’s not count on these once-off instances to fund our longer term structural spending increases,” he cautioned.
The money collected and saved, though, had allowed the Government to mount the recent $1.5 billion support package aimed at reducing the inflationary pressure on lower and middle income families within the current budget, he added.
MPs yesterday welcomed the package, but many also asked for further assurances from the Government.
Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) asked if more help will be forthcoming and if there is a “quantitative or qualitative threshold that will trigger another support package”.
Mr Louis Chua (Sengkang GRC), meanwhile, wanted to know exactly how much of household spending the support package will offset given that the Monetary Authority of Singapore’s projections on inflation had gone up from 2.5 to 3.5 per cent in January to 4.5 to 5.5 per cent now. “That’s quite a significant increase in terms of the expected rates of inflation,” he said.
To these questions, Mr Wong said the Government will monitor the situation very closely and will have to take into account existing support measures, external developments, global prices as well as local prices and the state of Singapore’s economy “before we size, if the need arises, any additional package”.
He added that it would be difficult to distil all these factors into a set of indicators or thresholds.
He also promised to put out more detailed figures to show the overall impact of household consumption and how the package will help those in different income groups.