In the five Budgets last year as well as in Budget 2021, which Deputy Prime Minister Heng Swee Keat presented on Tuesday, the overwhelming emphasis was on expenditure. With Singapore having experienced its worst recession since independence in the wake of the Covid-19 pandemic, this was appropriate. Outsized levels of expenditure were needed to preserve and create jobs, shore up companies and reskill workers for the emerging post-pandemic economy. The record levels of spending resulted in a record budget deficit of 13.9 per cent of gross domestic product (GDP) in financial year 2020, with another deficit of 2.2 per cent of GDP projected for FY2021.

With GDP officially forecast to grow by 4 per cent to 6 per cent this year, it is not too soon to focus on the revenue side of public finances. This is important for reasons of fiscal sustainability. Even after the pandemic passes, expenditure needs are likely to remain pressing. For example, health expenditures, which trebled over the last decade, will rise even further with the ageing of the population. Other social safety nets and infrastructure needs - not all of which can be met by borrowing - will also take a heavy toll on the public purse.