Unclear whether bumper tax collections can continue amid gloomy economic outlook: Chee Hong Tat

SINGAPORE – The record tax revenue of $68.6 billion posted for the 2022 financial year followed Singapore’s strong economic performance as it bounced back from the Covid-19 pandemic.

But while some of this growth momentum has benefited tax revenue collections in the current financial year, it is unclear whether the trend can continue due to the uncertain global economic outlook, Senior Minister of State for Finance Chee Hong Tat told Parliament on Tuesday.

There is some lag time in the way tax revenue tracks economic performance, so taxes collected in a particular period – such as the current financial year so far – could refer to economic activity several months back, he added.

“There are some dark clouds in the global economy, and the economic outlook for this year is unlikely to be as strong as, say, last year. These are things we have to monitor carefully,” he said, in response to Mr Ang Wei Neng (West Coast GRC), who asked about the tax revenue growth trend for the rest of the current financial year.

Mr Ang also asked if there can be further monetary payouts ahead of Budget 2024 to combat inflation, in the light of the bumper tax receipts, and if any additional support would come in the form of cash or vouchers.

Vouchers will have an expansionary effect on the economy as they must be spent, compared with cash, which can be saved, he said.

Acknowledging that the cost of living remains a concern for many Singaporean families, Mr Chee said that the Ministry of Finance is studying further enhancements to the Assurance Package, which was first announced in Budget 2020 and aims to cushion the impact of the goods and services tax increase for Singaporeans.

He added that the current package already encompasses vouchers, cash and other forms of assistance.

Still, the Government will study whether there are ways to enhance the package and the method through which assistance is provided, to channel resources in a way that maximises impact, said Mr Chee, who is also Acting Minister for Transport.

The Inland Revenue Authority of Singapore said on Sept 6 that tax revenue for the 2022 financial year

represented 75.4 per cent of the Government’s operating revenue

and 10.7 per cent of Singapore’s gross domestic product.

The $68.6 billion collected was about 13 per cent higher than revenue in the previous financial year, continuing an upward trajectory over several years that was interrupted only by a Covid-19 blip.