SINGAPORE - Taxpayers, both corporate and individual, contributed more to the Government's coffers in the past financial year, but analysts caution that the pace could slowdown on the back of the Covid-19 pandemic.
The Inland Revenue Authority of Singapore (Iras) collected $53.5 billion in taxes in the fiscal year 2019/20, 2.1 per cent more than a year earlier, according to its annual report released on Friday (Oct 16).
Iras' collection accounted for 72 per cent of government operating revenue. This amount represented 10.5 per cent of Singapore's gross domestic product, or economic output.
Going forward, Maybank Kim Eng senior economist Chua Hak Bin expects total tax collection to fall by around 10 per cent this financial year, with corporate income tax and goods and services tax (GST) taking the biggest hit due to the economic downturn.
"Stamp duties may not fall as much because property transactions have been more resilient," he said.
Singapore has slashed its full-year growth forecast to between -5 per cent and -7 per cent, its worst-ever contraction and first full-year recession in almost two decades.
In Parliament on Thursday, Deputy Prime Minister Heng Swee Keat said that GST collections this year are projected to be down by 14 per cent from initial estimates before the start of the year, mainly due to travel disruptions and the impact of the circuit breaker period.
Collection of GST is also expected to stay lower than usual for a few more years until international travel recovers fully, he added.
The bulk of Singapore's tax revenue comes from income tax, comprising corporate income tax, individual income tax and withholding tax. It amounted to $30.8 billion, or 57 per cent of Iras' collection for the 12 months ended March 31.
Corporate tax revenue grew 4.3 per cent year on year to $16.7 billion, while personal income tax collection went up by 5.7 per cent to $12.4 billion. These two areas account for over half of total tax collections.
The next biggest category of tax revenue was the GST, which made up 21 per cent of total collection. It increased by a slight 0.2 per cent to $11.2 billion.
CIMB Private Banking economist Song Seng Wun said a "sharp drop" in tax collection will only be seen next year, when the full impact of job and pay cuts due to the pandemic kicks in.
"There have been large sums of transfers to (support) businesses and workers, and government revenue will continue to lag behind expenditure," he said.
In a media release on Friday, Iras said that it continues to support the Government in administering assistance schemes such as the Jobs Support Scheme and Jobs Growth Incentive. Over $18 billion in grants have been disbursed so far this year.
It has rolled out digital initiatives - such as an interactive chatbot - to make tax filing more seamless, and will be moving most paper notices and letters online from May 2021.
Said Iras commissioner and chief executive Ng Wai Choong: "we will continue to partner various stakeholders to innovate and implement new digital solutions, so that tax-paying can be even more convenient."