Speech By Dr Richard Hu, Minister For Finance And Chairman, IRAS At The Opening Of IRASWORLD On 29 June 2001 At Revenue House At 11.00 Am29 Jun 2001
Distinguished Guests, Colleagues, Ladies and Gentlemen
1. Good morning and welcome to IRAS.
2. IRASWorld is a piece of Singapore's taxation history. More significantly, it reminds us of how taxes have contributed to nation building. Without the taxes collected over the past 35 years, we would not have had the means to pay for the national defence and security systems we have today. Nor would we have had the funds to finance the world class education, health and housing programmes we now enjoy. Much of the basic infrastructure needed to support our industries were also paid for from tax revenues.
3. Today, taxes make up about 78% of government's operating revenue and IRAS collects more than 70% of the total tax revenue. In Fiscal Year 2000, our total tax revenue was $25.96 billion. Compared to the $10.66 billion collected in Fiscal Year 1990, tax revenue has more than doubled in the last 10 years.
(:Budget for FY2001/02)
(:Book, FY 2001/02)
(:Book FY 1992/93)
4. This growth in tax revenue has taken place even while the tax burdens of individuals and companies have been progressively lowered over the years.
5. Income tax rates for individuals have been reduced and rationalized 3 times over the last 10 years from a range of 3.5% to 33% to the current range of 0% to 26%. In fact, the average income
tax burden of a taxable individual is currently only about 7%. Similarly, the income tax rate for companies has been progressively reduced from 32% in 1990 to 24.5% with effect from YA
2002. The property tax rate has also been reduced from 16% in 1990 to 10% in July 2001.
(:In YA1993, there were 14 bands with the rates from 3.5% to 33%. In YA94, the rates range from 2.5% to 30%. For YA97, there were 10 bands and the rates were reduced to a range of 2% to 28%. For YA2002, the rates range from 0% to 26%.)
(:Based on IRAS Annual Report 1999.)
6. The GST rate has remained unchanged at a rate of 3% since its introduction in 1994. In fact with the GST-related rebates and one-off rebates, two-thirds of individuals, otherwise liable to tax, do not pay income taxes today. Similarly, less than 30% of our companies pay income taxes.
7. The growth of tax revenue despite the lowering of tax rates has been made possible by the continued growth in the economy and prosperity of the nation. It is a reflection that earlier tax dollars have been prudently and judiciously invested in our people, our infrastructures and our nation building programmes.
8. This is an important lesson for us-that the taxes that the government collects have to be judiciously expended for sustained growth. Hence our belief that an honest and clean government is key to the survival and growth of a country. The government has always operated on the principle of financial prudence. It has taken care to ensure that taxes are carefully and effectively deployed in a public service that is effective and efficient, and programmes that will yield long lasting returns for the people.
9. IRAS, as the key public authority collecting taxes is therefore an important pillar of public service.
10. IRAS was corporatised in 1992 because it was clear that the tax administration had to be modernized and given more flexibility in its administration. IRAS has done well in its modernization programme, and it is no wonder that her success in the rapid adoption of new technology in revenue administration has been cited by a World Bank publication as an example for emulation by others.
11. It therefore gives me great pleasure now to declare the IRASWorld open. I hope that in capturing our taxation history, IRASWorld will provide another window for our people and visitors on what good and effective government entails and can bring about for the nation.