Grow Singapore's economy and everyone benefits, including the poor, Finance Minister Heng Swee Keat said yesterday.
"Rather than focus on how the pie is divided, we should grow the pie so that all can enjoy a larger slice," he said in response to MPs' concerns about social inequality during the Budget debate.
The Government was not raising income tax on the highest earners, as to do so would be to move in the opposite direction of world trends, he said, reminding the House that all jurisdictions were in competition for talent.
In response to Dr Intan Azura Mokhtar (Ang Mo Kio GRC), who on Wednesday had suggested there was scope for such a tax increase, Mr Heng noted that Hong Kong, which has a maximum tax rate of 17 per cent on incomes above $33,000, announced a reduction in personal income taxes in its Budget on Wednesday.
Currently, about half of Singapore's workers do not pay personal income tax. Among those who do, the top 10 per cent contribute about 80 per cent of the total personal income tax revenue.
Mr Heng also noted that the United States has reduced its headline corporate income tax rate from 35 per cent to 21 per cent, with further changes to keep US firms within the country. This may spur cuts in corporate income tax rates around the world, he said.
"Singapore must remain sensitive to these global trends that impact us. We are a small and open economy, subject to the full forces of competition in a globalised economy," said Mr Heng.
Singapore's economic strategy is "inextricably linked" to the opportunity for all to do well, regardless of background, and diversified and broad-based growth creates the opportunities for all Singaporeans to pursue their aspirations.
The topic of social inequality received a thorough thrashing on Wednesday, with MPs like Nominated MP Kok Heng Leun and Ms Jessica Tan (East Coast GRC) expressing concerns about the growing class divide. Mr Heng acknowledged that Singapore must "redouble its efforts" to provide opportunities for all to move up in life.
The approach to bridge the class divide and ensure social mobility includes education, skills training and opportunities in social mixing.
In education, for instance, the Government is investing significantly in the early childhood sector and SkillsFuture.
He noted that a Programme for International Student Assessment study found that half of 15-year-old students from the lowest quarter by socio-economic status here performed in the top quarter of students in all countries, after accounting for socio-economic status.
Said Mr Heng: "In other words, our system has enabled them to surpass their international peers in a similar socio-economic position in their own societies."
Ms Sylvia Lim (Aljunied GRC) also asked if inequality was systemic and called on the Government to commission a longitudinal study of the topic. To this, Mr Heng said the Finance Ministry had conducted and released two occasional papers in 2012 and 2015 on social mobility. The studies found that cohorts from 1969 to 1982 experienced good social mobility.
He urged Singaporeans to work together to bridge social divides, noting it is not only a matter of fostering opportunities and closing the income gap. "As a society, we must be mindful not to allow invisible, intangible divides to fester."
