Greater shift towards indirect taxes may be on the cards

MORE often than not, the parliamentary debate on the national budget opens with a chorus of requests from MPs for still more to be done for heartland households or resource-stretched businesses buffeted by rising costs.

Given the largesse of the 2015 Jubilee Budget, however, the overriding concern this year seemed to have moved instead to the issue of whether the economy would be able to sustain the expected spending set up by the initiatives to strengthen social safety nets as well as the country's overall socio-economic development needs. It's a valid question that warrants wider debate. To be sure, most of the business leaders polled for BT's Views from the Top lauded the new measures to get Singapore and Singaporeans future-ready via SkillsFuture, and to enhance support for companies to innovate and to internationalise, as their biggest takeaways from the latest Budget. Amid the kudos for these well-considered giveaways there was, thankfully, recognition too that all this surplus-sharing can be sustained only if there are surpluses in the future to speak of.

In his Budget speech last week, Deputy Prime Minister Tharman Shanmugaratnam, who's also Finance Minister, outlined Singapore's fiscal position for the near term. Government spending over the next five years will rise, on average, to reach about 19-19.5 per cent of GDP - or about 1 per cent of GDP higher than current revenues in hand. The 2015 Budget also saw new measures to boost the fiscal coffers - the addition of Temasek Holdings' expected returns to the government's Net Investment Returns framework, and not least, higher taxes from the top 5 per cent of income earners. The new revenue measures, Mr Tharman said, are projected to be sufficient for Singapore's increased spending needs till the end of this decade. That said, the latest move to raise the top income tax rates and further enhance the progressive tax regime here should reopen the debate on direct versus indirect taxation in the country's overall tax balancing in the longer term.