Deputy Prime Minister Lawrence Wong highlights fiscal challenges and the necessity of GST increase
SINGAPORE: Lawrence Wong, Deputy Prime Minister and Finance Minister, recently addressed Parliament, stating that Singaporeans benefit from a significantly lower tax burden compared to other nations, while still enjoying high-quality public services. This was mentioned during his closing speech on the Budget 2023 debate.
Wong acknowledged Singapore’s current fiscal constraints, noting that the country’s tax-to-GDP ratio is only 14%, far lower than most advanced economies. He emphasised the importance of maintaining this low tax burden to encourage hard work and entrepreneurship, allowing individuals and businesses to retain a larger portion of their earnings.
However, Wong also pointed out that Singapore’s tight fiscal position necessitates a second increase in the Goods and Services Tax (GST) in 2024. He warned that delaying this adjustment would only exacerbate future challenges, especially as the country’s elderly population continues to grow. He also responded to alternative proposals by the opposition Workers’ Party (WP), suggesting that wealth taxes, corporate tax hikes, or land sales revenue would be insufficient to replace the GST.
Wong stressed that Singapore requires a mix of taxes, including income, consumption, and asset-based levies, to maintain financial stability. He specifically criticised the idea of a net wealth tax, calling it difficult to implement effectively, as it has been abandoned by many countries over time. He also explained that reducing corporate taxes to compete with global subsidies would harm Singapore’s competitiveness.
Regarding land sales, Wong argued that using proceeds as revenue over lease periods would not generate more income than the current system, where proceeds are invested in reserves, yielding long-term returns that support the national budget. He highlighted that the current system is sustainable and beneficial both now and in the future.
On the issue of inequality, raised by WP Leader Pritam Singh, Wong acknowledged the need to address income disparity but emphasised that Singaporeans must also contribute by paying more for services, ensuring real wage growth for lower-wage workers, and maintaining social mobility.
