Singapore Budget 2016: S'pore's tax revenue collection: which way forward?

AMID an uncertain global economic environment, the Singapore public and businesses are anticipating the policy changes and measures to be announced in this year's Budget by newly appointed Finance Minister Heng Swee Keat on March 24, 2016.

Global economic conditions had been sluggish in 2015. According to the Ministry of Trade and Industry (MTI), Singapore's economy grew by 2.1 per cent in 2015 - lower than the 2.9 per cent in 2014. Economic growth in 2016 is forecasted to move at a modest pace of one to 3 per cent given a combination of reasons, including the continued slowdown in the Chinese economy, as well as the rise of insourcing in China and the US. These factors are unlikely to help in boosting the external demand for Singapore and countries in the region in the coming year.

It is likely that the government's tax revenue collection will be depressed in the coming year given that the levels of collection generally move in tandem with the state of the country's economy. Tax currently makes up more than two-thirds of the government's operating revenue. Consistent with the economic growth in year 2014, the Inland Revenue Authority of Singapore (IRAS) has collected a record all-time high of S$43.4 billion in tax revenue in the 2014/2015 fiscal year - S$1.8 billion, or 4.4 per cent, higher than the previous fiscal year.