Budget 2018 debate

WP does not support plan to raise GST: Pritam Singh

He asks Government to consider raising revenue needed through use of proceeds from land sales instead

MR PRITAM SINGH, Workers' Party assistant secretary-general

The Workers' Party (WP) does not support the plan to raise goods and services tax (GST), said the party's assistant secretary-general Pritam Singh, suggesting that proceeds from land sales should be used to boost revenue instead.

Stating the WP's position in Parliament yesterday, he said: "GST may well have to rise, but Singaporeans could be more likely to accept it if the Government considers the pros and cons of moving from the established orthodoxy, and consider new approaches that improve social protection thresholds for all."

GST is set to go up from 7 per cent to 9 per cent some time from 2021 to 2025, Finance Minister Heng Swee Keat announced last week, to support growing public spending such as in healthcare.

Mr Singh, the first opposition MP to speak during the Budget debate, asked the Government to consider instead what he described as a novel and relatively radical approach to raising revenue: the use of proceeds from land sales.

Under the Constitution, revenue from land sales is not available for budgetary spending, as land forms part of Singapore's past reserves.

The Government has said this prevents each term of government from unnecessarily selling land to meet expenditure needs, which could drive up property prices.

It has also said that part of the income from land sales, which is invested as part of the past reserves, is already available for spending through the Net Investment Returns Contribution (NIRC) framework. Up to half of the returns from investing the reserves can be spent.

Noting these reasons, Mr Singh said the issue of unnecessary land sales can be addressed with a cap on the amount of earnings that can be used, such as "not more than 20 per cent of the value of average land sales over 20 years, or 20 per cent of land sales for that year, whichever is lower".

"This would give no good reason for an ill-advised government to ramp up land sales when in government to increase its own income," said the Aljunied GRC MP.

He added that while part of the proceeds from land sales can already be used through the NIRC framework, there will be greater transparency if there is no "co-mingling" of the income from land sales with other reserves for investment.

This can also guard against poor investment decisions by entities that invest Singapore's reserves such as the GIC, said Mr Singh.

He also said the Government had not made clear what its expenditure will be in future when GST is slated to go up by 2 percentage points.

On the other side of the ledger, it is not known how much revenue levying GST on imported services will bring in. And given the Smart Nation push, Singapore is likely to become more efficient in collecting taxes, which could affect sectors traditionally thought to under-declare their income such as the self-employed, hawkers and taxi drivers, he said. All this "is likely to have a positive impact on tax revenues".

The final question mark is over the shape of the Government's offset package for the low income and middle income, he said.

Given this, there is a "lack of clarity" on whether it is necessary to raise GST, said Mr Singh.

"In view of the absence of such details, the Workers' Party is unable to support the announcement of a GST hike at this moment in time."

Several People's Action Party MPs took issue with Mr Singh's suggestion in their speeches.

Mr Vikram Nair (Sembawang GRC) said that it is "fundamentally wrong in principle" to use the capital upfront instead of putting it back into the reserves. "Ultimately, land is an asset...The best we can do is to treat it as an asset after it is sold, and if there is income, then we can use that," he said.

Added Mr Lim Biow Chuan (Mountbatten): "Once the land is sold, the asset is gone."

WP chairman Sylvia Lim (Aljunied GRC) was also scheduled to speak yesterday, but was not present when her name was called.

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A version of this article appeared in the print edition of The Straits Times on February 28, 2018, with the headline WP does not support plan to raise GST: Pritam Singh. Subscribe