SINGAPORE - Singapore collected more taxes and saved more money last year than originally projected, which was precisely why the Government was able to mount the recent $1.5 billion support package to help people cope with inflation, and fund it from its current budget, said Deputy Prime Minister and Finance Minister Lawrence Wong on Monday (July 4).
But it cannot count on these one-off instances to fund the structural spending increases expected in the longer term as Singapore's population ages and healthcare costs go up, he told Parliament.
Mr Wong was responding to Leader of the Opposition and Workers' Party chief Pritam Singh (Aljunied GRC), who asked about the Government's current fiscal position and whether there might be room to provide more financial help for lower- and middle-income families squeezed by the rising cost of living.
Mr Singh pointed out that the Government had collected even more revenue in the 2021 fiscal year than the 2019 fiscal year before the Covid-19 pandemic struck.
Specifically, tax revenue came up to $74.76 billion last year, more than 10 per cent higher compared with the $67 billion in 2019, and stamp duty collection hit $6.7 billion in the last fiscal year, 61 per cent higher than in 2019, said Mr Singh.
Acknowledging this, Mr Wong said the higher revenue collected was largely due to property and vehicle transactions, which are sentiment-based and may not happen year after year, while the lower spending was due in some way to fortune as the Covid-19 Omicron wave turned out milder than expected.
"Let's not count on these once-off instances to fund our longer-term structural spending increases," he cautioned.
The money collected and saved, though, had allowed the Government to mount the recent $1.5 billion support package aimed at reducing the inflationary pressure on lower- and middle-income families within the current budget, he added.
MPs welcomed the package, but many also asked for further assurances from the Government.
Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) asked if more help will be forthcoming and if there is a "quantitative or qualitative threshold that will trigger another support package".
Mr Louis Chua (Sengkang GRC), meanwhile, wanted to know exactly how much of household spending the support package will offset given that the Monetary Authority of Singapore's projections on inflation had gone up from 2.5 per cent to 3.5 per cent in January to 4.5 per cent to 5.5 per cent now.
"That is quite a significant increase in terms of the expected rates of inflation," he said.
To these questions, Mr Wong said the Government will monitor the situation very closely and will have to take into account existing support measures, external developments, global prices as well as local prices and the state of Singapore's economy "before we size, if the need arises, any additional package".
He added that it would be difficult to distil all these factors into a set of indicators or thresholds.
He also promised to put out more detailed figures to show the overall impact of household consumption and how the package will help those in different income groups.
Noting that the Government had been careful to target the measures more for the lower-income and vulnerable groups who will bear the brunt of higher prices, Mr Wong said excessive fiscal injections could be counterproductive.
Given that Singapore's economy is running above potential, this could result in even higher inflation, he added.
"We must always be mindful of this risk, recognising where the state of the economy is today, and think very carefully about the need as well as the timing and scope and size of any future support, if the need arises. So that's something we are committed to doing - monitoring closely and responding swiftly, if and when necessary," he said.
Mr Singh and Mr Saktiandi had also asked about help for specific groups, with Mr Singh suggesting a road tax rebate for those who use vehicles below a certain engine capacity and who earn salaries below the median rate.
Mr Saktiandi asked if there could be targeted schemes to help those in badly affected food sectors, such as poultry sellers.
To these questions, Mr Wong said the design of the $1.5 billion package was targeted to help those who are most affected by rising prices.
It had taken into account those who rely heavily on their vehicles for a livelihood, which is why there is a one-off relief for eligible main taxi hirers and private-hire car drivers.
As for hawkers, particularly poultry sellers, the Ministry of Sustainability and the Environment and other agencies have been working with them to help them adapt by selling frozen chicken or other goods where possible to keep their businesses afloat.
The minister added that there was also existing help such as through ComCare for lower-income groups and the Covid-19 Recovery Grant, which provides temporary financial support for those who lost their livelihoods due to the pandemic.
But he said it would be hard for the Government to shield businesses and workers directly from cost increases induced by external forces.
"What we will try very hard to do is to provide short-term relief, and in the process of providing that relief, we will also want to encourage businesses, families, individuals, wherever possible, to become more energy-efficient, for businesses to become more productive," said Mr Wong.
"So that even as we navigate through the immediate crisis, we will emerge stronger, greener and more productive and, therefore, better prepared for the challenges before us in a new environment."