AT a time when other economies are lowering corporate tax rates, Singapore must do what it can to remain an attractive place for work and business, said Finance Minister Heng Swee Keat on Thursday.
But this should not compromise the sustainability of fiscal revenue, he added. "In more recent years, more countries have lowered - or announced their intention to lower - corporate income tax rates," Mr Heng said in his round-up speech for Budget 2017. The United Kingdom and the new administration in the United States are planning to lower corporate tax rates, he noted.
"We must ensure that Singapore continues to be an attractive place to work, and to do business, so that we can have a thriving, vibrant economy," Mr Heng stressed.
No further details were shared by Mr Heng on Thursday, but enhanced corporate income tax rebates were introduced in Budget 2017.
The focus on corporate income tax ensures that Singapore's tax system is one that is sustainable. This means that it "rewards effort by individuals and enterprise by our companies", said Mr Heng.
Beyond corporate income tax rates, Singapore's tax system must be fair and progressive across income groups. "What this means is that those who are better off must contribute more," said the Finance Minister.
He noted that Singapore has been making its personal income tax and property tax rates more progressive.
This helps stave off some fiscal pressure from introducing or enhancing permanent schemes such as Silver Support and Workfare to provide more support to lower-income groups.
During Thursday's debate, Workers' Party chairman Sylvia Lim, who represents Aljunied GRC, called for proceeds from land sales to be considered a source of revenue in the budget, which "will reduce the need to tax the people further". She noted that 10 years ago, the sum was S$4-5 billion, and the revised sum for this financial year is S$11.8 billion. The projection for the coming financial year is S$8.2 billion.
Mr Heng rejected this idea, stating that putting the proceeds into past reserves is a prudent one. Only the returns from land sales can be used - and even so, the government can only use part of it.
"Any decision to raise taxes will not be taken lightly. We will study all options carefully," said Mr Heng. "We must start planning early. This is the right and responsible way, rather than give promises to be dealt with by future governments and Singapore comes under fiscal strain."