MOF COS Debate 2017 - Excerpt of 2M Lawrence Wong’s exchange with MP Low Thia Kiang

Mr Low:

Madam, I ask two specific questions on GST. I would like to seek clarification from the Minister.

Will the Government raise GST before the end of this decade? Whether it is a yes or a no? Does the Minister agree that GST vouchers do not fully offset the amount of GST paid by lower-income households?

Mr Wong:

Madam, in response to the questions that Mr Low raised, I would say that, as the Finance Minister said, we are studying all revenue options. Let's not jump to the conclusion of which particular tax is going to be increased or when. The point is that we are preparing ahead, and we are studying and keeping all options open at this time. GST is a progressive tax - the way we have designed it.

It's not a question of whether its offsets are sufficient to cover everything that the low income has to pay, but it's the overall progressivity of the system. And the way we have designed the GST, with a permanent voucher, is to make it a progressive consumption tax. That is the way the system is designed. We have had many debates in this House about this particular design feature of our GST system.

More fundamentally, on this issue we have to ask ourselves, and I think, ask Mr Low, these two questions.

Firstly, do we agree that our longer term expenditures, despite our best efforts to be prudent in spending, whatever we do. Do we agree that our long-term expenditures are going to go up, particularly in areas like healthcare with a population that is aging rapidly? And with huge infrastructure requirements that we do need to put in place to prevent our basic infrastructure from deteriorating and decaying. Do we agree that these long-term expenditures are going to go up?

Second, if we agree that long-term expenditures are going to go up, is it not proper and responsible and prudent for the Government to start thinking ahead of what these expenditure needs are, and preparing for all options and studying what revenue options we need to prepare for this eventuality? That is where we are today, and that is why the Finance Minister had highlighted in his speech the need to study all options.

Mr Low:

Thank you Madam. I would like to clarify in response to the Minister’s question.

Yes, I would expect the long-term expenditure to go up because of aging population and the need for infrastructure development. But that does not necessary mean that you have to raise taxes. Are there other forms of revenue that we can look at? For instance, revenue from land sales, which I think my colleague has brought up during the Budget Debate.

Secondly, is it not responsible of the Government to have an independent institution like what I suggested, so that the independent institution can study into the expenditures by the Government – what is necessary, what is it not? What can be cut back, and also explore other possible revenues rather than raise taxes.

And also look at what other taxes should be raised and is justifiable to do so. I would expect a responsible Government to allow information to be assessed by the public agency, independent. Thereby, people can have ample time and ample advice by an independent institution, rather than the Ministry of Finance.

Mr Wong:

Madam, I believe the Finance Minister had explained in the Budget Round-Up Speech that land sales revenues go into our past reserves. So unless the Workers' Party would like the Government to use past reserves, then this option is not going to be made available.

Mr Low said we should study all taxes, all different form of revenues before making the decision, but this is what we are doing. We are studying all revenue options. We are keeping all options open and we are looking at different possibilities to ensure that we have a sustainable fiscal system for the long term.