SINGAPORE - There is no contradiction between Prime Minister Lee Hsien Loong's comments on Sunday (Nov 19) about an impending tax hike, and what Deputy Prime Minister Tharman Shanmugaratnam had said in 2015 on the adequacy of revenue, the Ministry of Finance (MOF) said on Tuesday (Nov 21).
Its statement - in response to queries from The Straits Times - comes in the wake of online accusations that the Government is making a U-turn on raising taxes.
Mr Tharman, who was then finance minister, said in 2015 that the revenue measures the Government had already undertaken would provide sufficiently for increased spending planned until the end of the decade.
Said MOF: "This is in line with Prime Minister Lee's speech at the PAP convention on 19 November 2017, where the Prime Minister said, 'For this current term of government, we have enough revenue.'"
The current term expires in 2021, unless a general election is called before that.
Mr Lee triggered public discussion when he said on Sunday that "raising taxes is not a matter of whether, but a matter of when".
The MOF statement on Tuesday said that while any decision to raise taxes will not be taken lightly, "necessary investments in the future are needed".
"The Government has to remain forward-looking, planning beyond this decade, and will study all options carefully, doing it with least impact on the less well-off and on Singapore's economy," it said.
"Planning for the issue now will allow us to better ease in the needed measures, and to give our people and businesses some time to adjust," it added.
MOF also noted that government spending has been increasing, referring to PM Lee's speech in which he said that looking ahead, spending will rise further.
Mr Lee said that "investments and social spending are costly, and we have to make sure that we can afford them".
Social expenditure, in areas such as healthcare and education, almost tripled to $34 billion over a decade, according to Finance Minister Heng Swee Keat in his Budget speech this year.
Investments in infrastructure are also expected to grow to about $30 billion by the decade's end, said Mr Tharman in 2015.
Since Mr Lee's remarks on Sunday, economists and tax experts have suggested the goods and services tax (GST) is the tax most likely to be raised, with many expecting an announcement as soon as Budget 2018.
GST was introduced in 1994 at 3 per cent. It was raised to 4 per cent in 2003, to 5 per cent in 2004, then finally to 7 per cent - the current level - in 2007.
