The Government must maintain a delicate balance between generating enough revenue to meet the increasing costs of social spending and infrastructure, and keeping high-value jobs and investments here, said UOB economist Suan Teck Kin.
The magnitude of the challenge was laid out in the Budget on Monday. Development spending has risen from $12 billion five years ago to about $20 billion planned for this year, with estimates that it will reach about $30 billion by the end of the decade.
Mr Suan said there were a few ways to fund this increased spending: "One way is to raise the tax of high-income earners... But the other way is to make sure that you invest in the future."
This means creating high-income, high-value-added jobs that should also attract more high-value-added industries, he added.
Former Nominated MP Kanwaljit Soin said redistribution, rather than revenue, was the bigger issue: "Up till now, we have been very good at creating income. But when it comes to redistribution, everyone feels a bit scared - 'Oh, are we going to run out of money?'"
Dr Soin said such fears can be allayed because the coffers are protected by the Constitution, which calls for the Budget to be balanced within each term of government.
"So we ought to spend some money now for the drizzle and not just wait for a big storm. If we are judicious in our redistribution, then there will be some money left over for the big storm if and when it comes," she added. Redistribution, she said, is what will make Singapore a First World country.