The Inland Revenue Authority of Singapore (Iras) raked in bumper tax revenues of $47 billion in the fiscal year 2016/2017, about 5 per cent more than a year earlier.
Economists cited a turnaround in manufacturing in the second half of last year, as well as a recovery in property sales that started in the fourth quarter.
The Iras annual report out yesterday said the rise was "supported by the expansion of Singapore's economy by 2 per cent in 2016 and low unemployment rate of 2.1 per cent".
Its collections accounted for 68.2 per cent of the government operating revenue (GOR). This amount accounted for 11.3 per cent of Singapore's gross domestic product (GDP), or economic output.
OCBC Bank economist Selena Ling said the global and local economy "bottomed in mid-2016, and the second half of 2016 saw a turnaround, especially in manufacturing. Since the domestic labour market remained relatively healthy in 2016, that may explain why individual income tax as well as GST receipts improved".
Income tax comprising corporate income tax, individual income tax and withholding tax made up 54 per cent of Iras' collection for the 12 months ended March 31 .
The total was $1.1 billion over the previous financial year owing to a jump of 14 per cent, or $1.3 billion, in individual income tax collection due to higher individual earnings and cessation of one-off personal rebates given in YA 2015. But corporate income tax slid 1.6 per cent to $13.6 billion year on year.
More taxpayers here joined the millionaires' club. The number of those earning assessable income above $1 million rose 6.9 per cent to 5,524. Their combined assessable income was $10.6 billion and they paid about $1.96 billion in income tax. Another 17,802 people had an assessed income of $500,000 to $1 million each, up from 16,788 the previous year.
Stamp duty collection jumped 18.4 per cent to $3.3 billion after a rise in property transactions.
Maybank Kim Eng economist Chua Hak Bin said stamp duty collections were boosted by a 42 per cent jump in private residential sales in the fourth quarter of last year and an 89 per cent surge in the first quarter of this year.
The cost of collection stayed low at 0.84 cent per dollar collected. In 2016/17, Iras uncovered 10,626 non-compliant cases and recovered about $332 million in taxes and penalties through audits and investigations.
Goods and services tax (GST) collection rose to $11.1 billion from $10.3 billion a year earlier, while property tax collection slid 2.1 per cent to $4.4 billion. Betting taxes - betting duty, casino tax and private lotteries duty totalled $2.7 billion, down 1.4 per cent.
"The overall budget surplus position for full year 2017 may turn out to be better than the original forecast of $3.5 billion in the Budget speech in February this year. The Government will have more fiscal room to spend and support the economy in the next Budget, given the higher tax collection," Dr Chua noted. Further income tax and GST rises may not be necessary at this stage, he added.