Singapore—In Parliament on Monday (Apr 5), Second Minister for Finance Indranee Rajah called a claim in a Facebook post from the Workers’ Party (WP) last month “inaccurate and misleading”.
The WP had written a post on Mar 13 wherein it argued against the impending Goods and Services Taxes (GST) hike.
Although the GST hike from 7 to 9 per cent announced during the rollout of Budget 2018 has been postponed, it cannot be delayed forever, said Deputy Prime Minister Heng Swee Keat on Feb 16, when he announced this year’s Budget.
The GST hike will not take effect this year, but will do so between 2022 and 2025, depending on economic conditions, Mr Heng added.
The WP argued that the GST hike is unnecessary because of the Government’s cash surplus of S$205 billion for 2011 to 2020.
Ms Indranee said in Parliament that the majority of the Government’s cash surpluses is from proceeds from land sales.
These proceeds are not deemed part of the Government’s revenue and can’t be used for spending, she said, adding that “incorrect conclusions” were made concerning the fiscal position based on its published cash surpluses.
The WP had also said on its social media platforms that the GST is a “regressive tax” and that the “reported deficit figures do not account for our significant cash surpluses”.
The minister rebutted the claim made in the WP’s post.
According to Ms Indranee, we “cannot look just at the cash surpluses to understand the fiscal position”.
“It is not correct to suggest that because we had a certain amount of cash surpluses … that our fiscal position is better than what we have stated, or that we do not need to raise GST,” CNA quotes her as saying.
Ms Indranee used the example of the sale of a house to explain what she meant.
She compared the sale of a house to the Government selling land, saying “if we were to spend all the proceeds from land, it would deplete our store of wealth”.
“So long as the family owns the house, it can rent out some of the empty rooms to generate income. But if the family sells the house and uses the proceeds for day-to-day expenditure, it will soon have nothing left.”
Ms Indranee said if the proceeds of the sale are invested wisely, this would leave the seller with the original sale proceeds, in addition to a constant stream of income from those proceeds.
“This income can then be used partially for expenditure and partially reinvested to help sustain both present and future members of the family,” she added.
On social media, former journalist turned professor Bertha Henson commented on Ms Indranee’s analogy on Tuesday (Apr 6).
“Hmm. You sell your house, it’s gone forever. But if the G sells land on a lease, it comes back to the G later no? Sounds to me that deciding what is cash that can or can’t be spent depends on who is holding the cash! Seems to me that it is a political position which people should be persuaded on…rather than an economic justification.”
Follow us on Social Media
Send in your scoops to email@example.com