The planned GST increase is but one measure to meet rising spending needs, and will not be able to meet them in full, Mr Sitoh Yih Pin (Potong Pasir) said yesterday.
The Goods and Services Tax, currently at 7 per cent, is estimated to bring in $11.69 billion in the coming financial year. The rise in the tax rate by 2 percentage points to 9 per cent, sometime between 2021 and 2025, is expected to bring in an estimated $3.3 billion more in revenue, at best, he said.
Mr Sitoh, an accountant, turned to numbers to make his case on the need for prudence. Spending on an ageing population and expanding and renewing infrastructure is rising, he said in the final speech on day two of the Budget debate.
The Health Ministry's expenditure rose three-fold in 10 years, from $3.8 billion in Financial Year 2009 to an estimated $11.7 billion for FY 2019, he noted. Overall Government spending has risen from $57 billion in FY 2009 to a projected $80.25 billion in FY 2019. This figure does not include special transfers like the Central Provident Fund and Medisave top-ups, GST vouchers and household rebates, amounting to $15.3 billion for FY 2019.
"The projected GST increase is therefore simply only one measure to mitigate the trend of rising expenditure, but clearly is unable to meet it in full," he said.
One way to meet these needs was through borrowing, as it had for the MRT lines in the 1980s, for long-term infrastructure projects like Changi Airport Terminal 5. "Singapore is in a better position now to dictate favourable borrowing terms than in the past as our Government's credit rating is now among the world's best," he said.
But although this strategy of government spending is fairer and more equitable, it is also not without risk, he said. "We have seen enough examples around the world, of countries mired in debt arising from careless borrowings and reckless funding of projects."
He also urged the Government to ensure oversight of major infrastructure projects funded by borrowings, such as by creating an independent panel or body.
Speaking earlier in the day, Mr Gan Thiam Poh (Ang Mo Kio GRC) suggested raising taxes on gambling activities, such as winnings, to support recurrent spending. "(This) could provide a sustainable and long-term revenue to support the rising Singaporeans' social expenditure needs, leaving a rise in GST as a last resort," he said.
Mr Sitoh also addressed calls for more Net Investment Returns (NIR), proceeds from investing Singapore's reserves, to be tapped. Under the current framework, half the expected long-term real returns from GIC, Monetary Authority of Singapore and Temasek can be spent, while the remaining half is re-invested into the reserves.
Mr Sitoh noted the NIR contributes about 20 per cent of the Budget, which without this, would be substantially in deficit every year.
"There are those who advocate for more returns to be used for the present, but I think the current arrangement is fair," said Mr Sitoh. "As they say in Hokkien, 'jit lang jit pua' - half for this generation and half saved for future generations."