Ho Ching claims investment returns by GIC, MAS, and Temasek are the “single largest contributor to SG budget” more than income tax or GST

In a message on Monday, Temasek’s chief executive Ho Ching proclaimed that investment returns by Temasek, GIC and the Monetary Authority of Singapore (MAS) are the “single largest contributor” to Singapore’s budget.

Temasek and GIC (formerly known as Government of Singapore Investment Corporation) are sovereign wealth funds of Singapore while MAS is the central bank of the nation.

Ho Ching, who is also Prime Minister Lee Hsien Loong’s wife, added that the investment returns from MAS, GIC and Temasek are a greater contributor to the budget than personal and corporate income taxes and revenue from the Goods and Services Tax (GST):

“The single largest contributor to SG budget was the returns from investments by GIC, MAS, and Temasek. This is more than corporate or personal income taxes, and more than GST.

“This was since 2016, when Temasek was moved to the NIR framework for Singov budget. This means up to half of Temasek’s projected long term returns net of inflation may be used for Singov spending.”

Temasek’s head honcho further said that the Singapore Government would have had to raise taxes earlier for social spending if it did not tap on the dividends or returns from MAS, GIC and Temasek.

She added that programmes like the Pioneer Generation Package was possible because of the investment returns from these three bodies. If it weren’t for MAS, GIC or Temasek, she says the implementation of such programmes would necessitate “higher taxes or cuts to other essential programmes.”

“Without tapping on the dividends or returns from GIC, MAS, and Temasek, Singov would have had to raise taxes long ago for more social spending. Without such contributions, programmes like the Pioneer Generation Package could only have come from higher taxes or cuts to other essential programmes.”

Ho Ching’s claims comes about a year after the Ministry of Finance announced that it will hike the GST to 9 per cent from the current 7 per cent in the near future to cope with rising expenditure. The impending GST hike, coupled with hefty water price and electricity tariffs increases, will see the cost of living for ordinary Singaporeans continuing to rise.

As she shared her insights, Ho Ching linked a recent Channel NewsAsia article that stated: “At 17.9 per cent, the investment returns contribution from reserves – also known as Net Investment Returns Contribution (NIRC) – is the largest contributor to the Budget. The NIRC is expected to hit an estimated S$15.8 billion in FY2018.” 

Ho Ching added on Facebook:

“Previously, Temasek’s contributions to the budget spending was up to half its dividend payments to its shareholder, Singov. But dividends are more volatile and pro-cyclical – the dividends are more in good years and less in recession years, which is the opposite of what govt budgets should be.

“Govts should spend more in recession years and save more in good years, as a way to moderate the swings. But this is also practical in a way, bcos it is cheaper to build infrastructure in the recession years rather than during boom years.”

Her post gained some traction on social media with PAP members like Zainal Bin Sapari and Yeo Guat Gwang sharing the message and the article from her page. Zainal is an incumbent PAP MP at Pasir Ris-Punggol GRC while Yeo was a longtime PAP MP who was ousted from Parliament when he faced off against the Workers’ Party in the 2015 General Election.

Some netizens responding to Ho Ching’s post, however, asked why the GST is still being hiked if MAS, GIC and Temasek contribute so much to social spending. The Prime Minister’s wife has not responded to these Singaporeans: