We have been steadily reducing our direct taxes over the last few years. This year, we have lowered the corporate tax rate down to 20%. There are no plans to lower it further, but let me assure Mrs Fang Ai Lian that neither is 20% a sacred cow. In fact, they have become an endangered species! Many countries are cutting their corporate income taxes. We have to continue to monitor our competitiveness. If it should become necessary to cut the corporate income tax again, we will have to do so. If the Americans bring their rate down, and if the Europeans bring their rate down, we have to do so. But, remember, it will mean we have to make up the revenue in some other way. Some other taxes will have to go up.

Sir, we watch the other countries. We see Hong Kong, 16½%, going up slightly. I am not sure what they will do today - it is their Budget day. Or Ireland, 12½%, as Dr Gan mentioned. But there are trade-offs. In Hong Kong, the corporate tax is low; the personal income tax is low; the budget deficit is 7% of GDP. They hope to cover it but it is going to be a tough slog.

In Ireland, the corporate tax is very low, 12½%, but the GST is something close to 20% and the personal income tax is something close to 50%. So, there are trade-offs which we have to make.

As for personal income tax, Dr Gan expressed disappointment that we have “mothballed” the reduction in personal income tax to 20%. Let me assure her that we have not mothballed the idea. We had to postpone the reduction, but I have not given up the objective. The Government remains committed to cut the top personal income tax rate to 20% as soon as our fiscal position and our economic conditions permit. We have not changed our goal.