Trends for Singapore's Tax Sources and Strategies to Ensure Long-term Tax Revenue Sustainability

Parliamentary Question by Mr Saktiandi Supaat:

To ask the Prime Minister and Minister for Finance in light of the IRAS’ latest annual report showing that corporate income tax and GST are the two largest revenue sources (a) whether such trends are expected to persist; and (b) what strategies are being adopted to ensure long-term tax revenue sustainability given the volatility of corporate tax collections, potential of economic slowdowns and evolving global tax regimes.

 Parliamentary Reply by Second Minister for Finance, Ms Indranee Rajah:

Corporate income taxes and goods and services taxes are regularly the highest contributors to tax revenue. While corporate income tax collections have increased in recent years, this cannot be taken for granted, given the increasingly competitive investment landscape, economic volatility and new developments on international tax regimes like the BEPS Pillar Two. The increase in GST revenue due to the GST rate increase in the last term of government supports medium-term priorities such as rising healthcare costs of an ageing population. 

Revenue sustainability is an integral part of Singapore’s fiscal strategy. This is why we made several revenue moves in the last term of Government to make our tax base more resilient and diversified. The Net Investment Returns Contribution (NIRC) from our reserves now provides about a fifth of our annual budget. We will continue to manage our expenditure prudently, while adjusting our tax policies where necessary to adapt to changing circumstances.