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3.14 Consultation and feedback are essential to formulating
successful public policies. Wherever possible, the Government
will consider the views of those affected by its policies,
and those who have expert knowledge of the matter.
3.15 For example, MOF recently conducted a public consultation
on whether to move to a current year basis of assessment
for income tax. Under the current year basis of assessment,
income tax is payable on income as it is earned, instead
of being based on income earned in the previous year,
which is the practice today.
3.16 MOF felt that there were macroeconomic as well
as cash-flow benefits to making the switch. With current
year assessment, when earnings go down, income tax payments
will go down at the same time, rather than one year
later. This would provide fiscal support to the economy
in a downturn, while helping companies and individuals
with their cash-flow. However, many respondents in the
public consultation exercise highlighted the administrative
burden and compliance costs of the proposed system.
In view of this, the Ministry re-examined the benefits
of its proposal against these costs, and concluded that
it was not worth the imposition on businesses and individuals
to restructure the tax system in this way. MOF has therefore
decided not to implement the current year basis of assessment
at this stage. More details of how MOF came to this
decision can be found in the Budget Highlights
document.
3.17 Feedback is an important part of policy formulation,
and not just for fine-tuning policy implementation.
The public consultation on whether we should have a
current year basis of assessment highlighted issues
and concerns that helped MOF to assess the overall benefits
and costs of the proposal. It has strengthened the MOF’s
intention to test new ideas with the public as a matter
of practice, so as to design better policies.
3.18 However, a commitment to consult and seek feedback
does not mean government by referendum. Government decisions
cannot always be guided by popular preference or straw
polls, nor should they be swayed by organised interest
groups. The Government must always decide based on an
objective and well-informed assessment of whether a
particular course of action is in the long term interests
of Singaporeans. And this is as true of current year
assessment of income tax as it is of whether we should
have a casino. This is a responsibility which the Governement
cannot abdicate.
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