Richard Hu Tsu Tau
Singapore
“Sir, I think it is eminently fair, because the proposal really is for the Government to spend money to give shares to Singapore citizens. Either you agree or you do not agree. Or, if you agree, perhaps you consider the amounts insufficient or too much.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time". The purpose of this Bill is to make provision in accordance with Articles 148(2) and 148C(2) of the Constitution for additional expenditure in excess of the provisions authorised by the Supply Act, 2001.”
“I think the Prime Minister and DPM Lee have already explained it will be based on income levels, with people living in flats as a proxy. So there is no political content in it. It depends on the income level, whether you have served national service or whether you are an elderly person.”
“I really do not understand. I know you are arguing on technicality for which I agree that you may have a point. But, nevertheless, because it is a proposal to share Singapore's surpluses with the population, the distribution is not something which you can argue against.”
“As I said, the estimates will be available around mid-October. I do not think, at this time, I want to give a specific date when the second package will be announced, but it will be done as soon as practicable. IN-PRINCIPLE AGREEMENT WITH MALAYSIA ON OUTSTANDING BILATERAL ISSUES (Assessment) 4.”
“Mr Speaker, Sir, when the $2.2 billion off-Budget package was announced in July this year, we said that the Government would do more to assist Singaporeans if the global economic situation worsened in the coming months.”
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“Mr Speaker, Sir, the total amount of duty collected on petrol and petroleum products was $499.5 million in 1990, $531.3 million in 1991, and $417.7 million from January to September 1992. ALLOWANCE FOR PENSIONERS (Review of quantum) 16. Mr Tong Kok Yeo asked the Minister for Finance whether he will consider reviewing the quantum of the allowance for pensioners.”
“Of course, we do, but not necessarily with incentives. Each person should consider how he should deploy his capital. He may decide that it is more profitable for him to own shares. Why should we dictate or try to influence him in his decision-making? DUTY ON PETROL AND PETROLEUM PRODUCTS (Total amount collected) 15. Mr Ling How Doong asked the Minister for Finance what was the total amount of duty/tax collected on petrol and petroleum products in 1990, 1991 and up to the latest convenient month in 1992.”
“I am prepared to consider anything. However, I think the third-quarter results are beginning to look somewhat better. The prognosis is that it should be better in the final quarter and, hopefully, even better next year. Of course, if the situation should deteriorate substantially, anything is possible.”
“Yes, I do, because annual values are revised periodically and they of course cover a wide range of properties. Those which have been rising quite substantially are those which have not been revised for a long time. So some of the quantum jumps may look big, but they are being merely brought up to current market levels.”
“During the recession in 1985/86, we did reduce the property tax rate from 23% to 12%. Subsequently, with the recovery of the economy, it has been raised back, not to 23%, but to 16%. So a reduced rate of property tax has in fact been implicitly introduced. I do not think that at this stage we want to make further concessions unless there is substantial justification.”
“I have said that the concessionary rate for home- ownership is introduced because widespread home-ownership is clearly desirable for social purposes, and a concessionary rate for other than private home-ownership will have very little economic justification.”
“Mr Speaker, Sir, there is no economic justification to have a concessionary property tax rate for owner-occupied industrial and commercial properties. To do so would be to discriminate against businesses that operate from rented premises. It would distort the businessmen's choice towards buying as against renting properties. In the case of residential properties, the concessionary tax rate for owner-occupation is given to encourage home ownership.”
“Mr Speaker, Sir, I am not disputing much of what Dr Soin has said. I am merely stating that the existing package of civil service remuneration contains this particular requirement. I have also said that the issue of civil service remuneration is under review, and the question of medical benefits is one of the factors under consideration. PROPERTY TAX FOR COMMERCIAL AND INDUSTRIAL PROPERTIES (Preferential rate for owner-occupation) 14. Mr Chia Shi Teck asked the Minister for Finance whether he will introduce an owner-occupation preferential rate for property tax for commercial and industrial properties.”
“This is merely a projection of land protected for possible use as golf courses. It does not mean that 15 golf courses are going to be built. BACHELOR OF ARTS/SCIENCE DEGREE WITH DIPLOMA IN EDUCATION COURSE (Reduction to 3-year specialist course) 6. Mr R. Sinnakaruppan asked the Minister for Education whether he will consider reducing the Bachelor of Arts/Science Degree with Diploma in Education to a 3-year specialist course instead of 4 years, while maintaining standards, so as to attract more undergraduates to the teaching profession and to expedite the increase of graduate teachers in our schools.”
“Sir, I do not think you can allocate land in proportion to usage because usage varies tremendously. Most of the golf courses are in fact in areas where alternative uses are limited. They are either in the flight path zone near the airport or they are in the catchment areas. I would also like to point out another fact. In addition to the actual membership of these golf clubs, they also cater to large numbers of foreign tourists and charge significant fees.”
“Mr Speaker, Sir, today, public parks occupy about 2,080 hectares or 3.3% of the total land area of Singapore. Another 4,170 hectares or 6.7% of Singapore's land area are nature areas, such as Bukit Timah Nature Reserve, which are accessible to the members of the public. Together, public parks and nature areas amount to some 6,250 hectares or 10% of Singapore's land area. Existing golf courses occupy about 920 hectares or 1.5% of the total land area of Singapore.”
“The two vacant plots of land at the junction of Upper Serangoon Road and Potong Pasir Avenue 1 are parts of the Neighbourhood Centre in Potong Pasir Estate. At present, HDB has no plans to develop them.”
“And equally important, it will serve to ensure that managers and executives who are generally on more generous retrenchment terms do not receive in priority disproportionate sums in retrenchment benefits relative to workers. At the time when the provision was proposed under the Companies (Amendment) Bill of 1986, the bulk of unionised workers were either production workers or clerical workers. The average monthly salaries of these workers were $645 and $737, inclusive of overtime and allowances, respectively. These were 1985 figures obtained from the Annual Labour Force Survey. The cap of $6,250 would not, therefore, compromise their position as it was well above the ceiling of five months' salary. Question put, and agreed to. Resolved, That the Companies (Amendment) Bill be committed to a Select Committee consisting of Mr Speaker as Chairman and such Members as the Committee of Selection may nominate. - [Dr Richard Hu Tsu Tau]. ENDANGERED SPECIES (IMPORT AND EXPORT) (AMENDMENT) BILL Order for Second Reading read.”
“Notwithstanding what I have just said, the unanimity with which Members have requested that the Bill be referred to a Select Committee suggests that the concerns are widespread and may extend beyond this House. In view of this, I intend to propose to this House that the Bill should be committed to a Select Committee. Finally, I will touch on one aspect of questions raised that has got nothing to do with the Central Depository system or clause 22, and this is the question raised for clarification on why the retrenchment compensation should be limited to $7,500. The ceiling of five months' salary or $7,500, whichever is the lesser, is based on the ceiling currently provided under the Companies Act which allows for wages and salaries not exceeding five months' salary or $6,250, whichever is the lesser, to be ranked second in priority after the costs and expenses of winding up. The rationale for the quantum of $1,250 per month was that it was in harmony with the Employment Act where $1,250 per month is the cut- off for those non-manual workers deemed to be deserving of statutory protection with regard to conditions of service, such as overtime hours and service and so on. It is also the cut-off for non-manual workers covered by the Workmen's Compensation Act. The ceiling of $6,250 or five months' salary was to strike a balance between the rights of workers and managers on the one hand, and other unsecured creditors on the other, in a winding up. At the same time, it would preserve the interests of workers as it is unlikely that the five months' salary of workers would exceed $6,250.”
“This is a possibility, of course, but the current Companies Act provides for the scrip system of ownership. So it appears logical that the scripless system should, in fact, follow from this legislation. However, it is something which we can debate later. I would also like to point out that many other countries are in different stages of implementing the scripless settlement system in their stock exchanges in order to take advantage of their efficiencies. Taiwan, Hong Kong, Australia and Japan have, in one form or another, implemented computerised systems. Malaysia is also about to introduce the central depository system, starting with stocks listed on the KLSE second board. In the UK, the much publicised Taurus system, when implemented, will similarly provide for electronic settlement of securities transactions. In the United States, the deposit trust company operates a depository system which immobilises physical share certificates in much the same form as we are proposing in this Bill and effects transfer by way of book entries to securities accounts maintained by participating financial institutions in it. Members should also note that in countries which have long experienced the book-entry system of securities settlement, such as the United States, there is substantial evidence that the opportunities for and incidence of loss of scrips or fraud are sharply reduced, as control and detection are enhanced. In the second case, Members are mainly concerned over the provision of clause 22, as it may open the door to a flood of frivolous or petty applications by disgruntled minority shareholders. Although I believe that adequate safeguards have been built into the legislation, the concerns will be addressed.”
“Mr Woon has suggested that the structure of the operation of the central depository system should perhaps require the transferee to execute a signed transfer form. I believe this is what he would like to see. Unfortunately, the whole purpose of creating a legal framework for electronic share transfer is to do away with paper transfers. To implement a system which only partially deals with this problem will defeat the purpose of the exercise and will not enable us to reap the benefits of a completely paperless system. The concern over lack of controls of the proposed book entry system is, I think, not entirely warranted, as the CDP is required to send a confirmation note to account holders for every transaction. In addition, they are required to send periodic statements of the balance of the securities accounts for verification. It is also provided in the regulations for external auditors to verify the records of the CDP and the report will have to be sent to the relevant authorities for review. In the regulations, the MAS would also have power to supervise the operations of the CDP. Overall, there is a growing trend to a scripless settlement system in major world markets. Such a system enhances productivity significantly by eliminating the need for huge backroom support staff to assist in the settlement and clearance of trades. In a world where securities markets continue to globalise, efficiency and cost are important factors of ensuring whether a particular market can succeed. Mr Woon has also suggested that the CDP section of the amendment Bill should be taken out of the Companies Act altogether and be placed perhaps in the Securities Industry Act or in a separate Act altogether.”
“Mr Speaker, Sir, I would like first to thank the many Members who have spoken in support of the main aspects of the Bill. However, Members have also expressed concern and sought clarifications over many areas of the Bill. There have also been requests from Members that the Bill be referred to a Select Committee. Most of the debate has focused on two major amendments in the Bill. The first is the part which concerns with the establishment of the central depository system and the electronic book system for the transfer of securities listed on the SES. The second is clause 22 which provides more effective remedies for the rights of minority shareholders of corporations. In the first case, Members have expressed concern over the electronic transfer system which may expose investors to many risks, eloquently described by Mr Woon, arising from errors in the electronic recordings of transactions and that there may be insufficient safeguards to protect investors' interests against fraud and negligence on the part of the central depository. In this connection, I should point out that the proposed legislation has been under consideration for well over a year and a half. It has been discussed extensively with members of the Stock Exchange, the Merchant Bankers' Association and the Association of Banks. Furthermore, the draft legislation has been considered and approved by the Law Reform Committee of the Singapore Academy of Law and, I believe, Mr Woon had participated in some of these activities. However, if he has now further thoughts on the legal aspects of this Bill, I think his points are taken and will be considered.”
“In the event that the quantum of retrenchment benefits is not spelt out in the contract of service or collective agreement, the amount of compensation will be decided by the Commissioner of Labour; (b) to allow claims for retrenchment benefits or contractual ex-gratia payments, to be payable to employees who have less than three years' service and who do not qualify for retrenchment benefits, to be accorded priority ranking after the "costs of winding up" and "wages and salaries"; and (c) to subject the total claim for retrenchment benefits, contractual ex-gratia payment as well as "wages and salaries" as priority treatment to the ceiling of $7,500 or five months' salary, whichever is lower. Claims exceeding this ceiling shall be rated pari passu with other unsecured debts. The amendments to section 209A and the Ninth Schedule are, by and large, of a drafting nature to remove uncertainty in existing law relating to the consolidation of accounts and accounts generally of a company which practising accountants have come across in the course of their practices. The remaining amendments in the Bill are, in the main, designed to improve administration of the Act as well as to remove existing anomalies in it. Sir, I beg to move. Question proposed.”
“Such actions would be brought, for example, where the directors of a corporation refuse to enforce rights belonging to the company. The clause would provide more effective remedies for minority shareholders than existed at common law at present. It would have the effect of overriding the obstacles put in the way of such actions by the common law. To ensure that the remedies that would be open to shareholders are not abused and give rise to unjustified court actions, section 216A contains strict conditions that must be satisfied before any action can be brought against corporations. I shall now go through the other amendments in the Bill. Clause 8 of the Bill seeks to enable the Minister to petition the Courts to wind up a local company, and the Registrar to strike off a foreign company from the register, if the local company or foreign company has been convicted of an offence under the Charities Act or the regulations made thereunder. Clause 23 amends section 328. The amendments have become necessary because of the High Court ruling in 1989 that retrenchment benefit is not payable when a company is in liquidation. To provide adequate protection for workers made redundant as a result of their companies being placed under liquidation, this section of the Companies Act will be amended as follows: (a) to specifically stipulate that retrenchment benefits will be payable to employees affected by the winding-up of a company.”
“Apart from these advantages, it provides greater security for investors and minimises the opportunities for fraud and forgery as well as losses from misplaced certificates. The essence of the system is that all owners of securities of companies that are listed on the SES will deposit the certificates relating to these securities with the Depository, and register them in the name of the Depository or its nominee. Shareholders of these listed companies may, however, at any time, withdraw these certificates and register them in their own names, if they, for whatever reason, choose to do so. But they will not then be allowed to trade in such shares on the SES unless the shares are brought back under the Central Depository System. The true ownership of the securities will be evidenced in accounts kept by the Depository in the name of each depositor. When the latter wishes to buy or sell securities, he gives instructions to the Depository or his depository agent which will effect the transaction by entering it in the Depository Register. The new Division 7A seeks to ensure that the book entry system has the backing of statutory law and that proper safeguards are written into the law so that shareholders' rights and liabilities under the Act are preserved. Special provision is made for the mortgaging of book-entry securities. It clarifies doubts as to whether the scripless securities can be mortgaged and how this can be done. Powers are also conferred upon the Minister to make regulations in respect of the depository system. I now refer to the next major amendment. Clause 22 would make statutory provision for representative or derivative actions to be brought by shareholders on behalf of their corporations.”
“In the meantime, until he receives the physical share certificates from the company register, the buyer is denied the opportunity of re-selling the shares in the market at the opportune time. To overcome these problems, the Central Depository System was introduced. Transfer of listed securities by reproduction of share certificates and transfer forms under the paper-based settlement system will be replaced by book-entries in the computer-based records controlled by an operator called the Central Depository Pte Ltd, or simply known as the Depository. Such a major conversion exercise, involving hundreds of listed companies and thousands of shareholders, obviously cannot be accomplished overnight. Until this exercise is completed, the paper-based system of transfer for listed securities will continue to function in parallel with the book-entry settlement system on the stock exchange. As far as the trading in shares on the stock exchange by investors is concerned, this will continue in much the same way as under the paper-based system. Shares will still be bought and sold through brokers. Investors whose names are entered in the Depository Register shall be deemed to be members and consequently retain all the existing rights that go with such membership. For example, rights to dividends and voting rights. The main changes will occur, as I have mentioned, in the procedures of transfer of ownership of the shares. The Central Depository System, as it is called, that is introduced in the new Division 7A of the Bill, gives statutory support to the book-entry system introduced by the SES. This new system will avoid the inconvenience, waste and inefficiency associated with the paper-based system.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Bill before the House has two main strands. First, it seeks to make provision for the computerised depository system for scripless transfer of securities listed on the Stock Exchange of Singapore (SES). Secondly, it provides a new regime that will enable representative or derivative actions to be brought on behalf of a corporation to enforce the rights of a corporation where the directors, for example, refuse to enforce those rights. Apart from these major amendments, the Bill contains amendments that are designed to provide for the winding up of local companies and striking off the register of foreign companies which have been convicted of an offence under the Charities Act or the Regulations made thereunder. The Bill also makes provision for retrenchment benefits or contractual ex-gratia payments to be payable to employees on the winding up of a company. The remaining amendments are basically to remove anomalies in the Act and to improve its administration. I now deal first with that part of the Bill that is concerned with the electronic transfer of securities listed on the SES. Company law had for long required that every transfer of shares should be evidenced by a share certificate and the delivery of a completed transfer form to the company so that it could enter the name of the transferee in the company register and transfer the legal title to the shares to the transferee. Besides the great deal of paperwork involved, there is considerable delay between the time shares are sent for registration in the buyer's name and the time the shares are returned to the buyer.”
“The remaining consequential amendments, namely, clauses 3, 4, 5 and 13, result from the tax incentive for approved international shipping enterprises, the commodity futures market, the change in tax basis for life insurance companies as well as the tax exemption on dividends paid out of foreign income. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Dr Richard Hu Tsu Tau]. Bill considered in Committee; reported without amendment; read a Third time and passed. DRUG TRAFFICKING (CONFISCATION OF BENEFITS) BILL (As reported from Select Committee) Order for Third Reading read.”
“The first concerns sections 14(b), (c) and (d) of the Income Tax Act which allow a further deduction for expenses incurred in export promotion of Singapore-made goods by manufacturers and traders; and approved research and development projects in selected knowledge-based industries. At present, the portion of the income that is granted further deduction is not deemed as exempt income for purpose of declaring tax-free dividends. Clause 7 amends these sections of the Act to allow companies granted this incentive as well as the newly announced tax incentive for skill and knowledge-intensive financial activities to pass on the benefits of further tax deduction to their shareholders without incurring further tax. The second amendment relates to the penalty for repeat offenders. Section 94(2A) currently provides for a further penalty against the taxpayer who has been convicted more than once for the same Year of Assessment for failing to comply with specific sections of the Income Tax Act. However, the existing provisions do not spell out the circumstances under which non-compliance is deemed to be a subsequent offence. Consequently, section 94(2A) cannot be invoked. Clauses 16 and 19 will amend section 94(2A) and provide for new sections 44(8A) and 94(2B) to rectify the anomaly. The rest of the amendments are consequential in nature. Clause 11 amends section 39 to allow tax deduction for compulsory contribution to Medisave by the self-employed with effect from Year of Assessment 1993. Following the increase in the employer's CPF contribution rate from 17 1/2% to 18%, clause 6 amends section 14(1)(e) of the Income Tax Act to allow, up to the limit of 18%, the deductions in respect of an employer's contribution to an approved pension or provident fund.”
“Consequently, the reduced rate will apply to non-residents, trustees and executors as well as tax withheld at source on payments to non-residents. Clauses 13 and 17 amend sections 43 and 45 for this purpose. There are also two other amendments resulting from the deduction in corporate tax rate. The first relates to an adjustment to the dividend franking credit mechanism. Although the reduction in corporate tax rate takes effect from the Year of Assessment 1993, that is, 1st January 1992, companies could only be informed of this after our Budget announcement. Adjustment is, therefore, necessary for those dividends declared in the early part of 1992 of which tax has been withheld at 31%. A transitional adjustment is also needed to avoid the mismatch whereby dividends derived before 1st January 1992 is taxed at 31% while a credit of only 30% is allowed on such dividend if the recipient company is assessed on such dividends in the Year of Assessment 1993. Clauses 10, 16 and 18 amend sections 35(2A), 44 and 46 to provide for these changes. The second amendment relates to the tax rates in Part B of the Second Schedule of the Income Tax Act. With the lowering of the corporate tax rate to 30%, the highest effective tax rate imposed under Part B of the Second Schedule to the Income Tax Act will be limited to 30%. This will ensure that those who are taxed under the existing Part B marginal rates, such as management corporations and clubs, will, in effect, not be taxed above the corporate rate of 30%. Clause 12 amends section 42(5) for this purpose. I shall now deal with the remaining tax changes not announced in the 1992 Budget Statement. Two of them are necessary to fine-tune the existing provisions in our tax legislation.”
“It does not fully reflect the profitability of the insurance company, nor does it make a distinction between the income of the company that accrues to its policyholders as against shareholders. I have thus announced that with effect from Year of Assessment 1993, life insurance companies will be taxed on their total income derived out of the Singapore business. This means that the assessable income of life insurance companies will include premiums in addition to investment income arising from the Singapore business. At the same time, the expenses that can be deducted will now include benefit payments and increases in actuarial liability to policyholders. The resultant chargeable income attributable to policyholders will then be taxed at 10% whilst the portion attributable to shareholders will be taxed at the prevailing corporate rate. Clause 9 amends section 26 to provide for this change. Members will recall that in recognition of the contributions of reservists to Total Defence, I have announced that with effect from the Year of Assessment 1993, tax reliefs for reservists will be given in two tiers: $1,000 for active reservists and $500 for those who have done national service but are not in active reserve service. Clause 11 amends section 39 to effect this. To reward effort and enterprise, I have also granted a 5% one-off and across-the-board rebate on personal income tax payable for the Year of Assessment 1992. Clause 20 provides for this rebate. The corporate tax rate will also be reduced from 31% to 30% with effect from the Year of Assessment 1993 to help maintain Singapore as an attractive location for investments and to offset some of the business cost increases of the past year.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Income Tax (Amendment No. 2) Bill, 1992, gives legislative effect to income tax changes announced in the 1992 Budget Statement and 12 other changes not announced in that Statement. One of the tax incentives I have announced was to promote the establishment of the RAS Commodity Exchange Limited which will provide a centralised and regulated marketplace for trading of commodity futures. With effect from Year of Assessment 1993, the Exchange will be exempted from tax on its income from futures activities for a period of five years. In addition, the qualifying income derived by participants of the Exchange will be taxed at a concessionary rate of 10%. These incentives are similar to those granted to SIMEX. Clauses 2 and 15 amend section 13 and insert a new section 43K to provide for this incentive. To foster the development of sophisticated high value-added financial activities, I have also announced that with effect from Year of Assessment 1993, financial institutions will be allowed double tax deduction for expenses relating to the establishment and development of approved financial activities in Singapore. Clause 8 inserts a new section 14J to provide for this tax concession. Currently, life insurance companies are taxed on the excess of investment income over management expenses and agency commissions. Where a life insurance company also carries on business outside Singapore, the income on which tax is payable is its world-wide investment income apportioned in the ratio of Singapore premiums over world-wide premiums. This basis of taxation is not satisfactory.”
“Sir, the hon. Member refers to the "Silicon Valley in Australia". I am not aware of such a place. I am assuming he means the Silicon Valley of California, USA. Singapore Technologies Ventures (STV) is one of the five sector companies in Singapore Technologies Holdings (STH) and has invested a total of S$38 million in Silicon Valley companies. Net loss from those investments in 1991 amounted to S$5 million. Net loss in 1992 is expected to be less than S$0.5 million. Investment in venture companies should be seen in a wider context and over a longer time frame. Not all investments will be profitable, nor always on a year by year basis. For example, total STV venture capital investments in the United States as well as other parts of the world are S$80 million at cost. For these investments, including those in Silicon Valley, while net loss in 1991 was S$7 million, for the period January to August 1992, there is a net realised gain of S$16 million. Additional net unrealised gain to date is more than S$50 million. Another STH sector company, Chartered Industries of Singapore (CIS) has invested S$280,000 in one company in Silicon Valley. This company has got into financial difficulties. CIS will be writing off this investment in its 1992 accounts. The remaining three sector companies of STH have no investments in the Silicon Valley. HDB RENTAL FLATS (Number of applications) 7. Dr S. Vasoo asked the Minister for National Development whether applications for Housing and Development Board rental flats increased in the years 1989 to 1991 and what steps are being taken to meet the housing need of the applicants.”
“That is true. This is what we do for the bulk of our investments, including Mount Charlotte. It could be argued that in the short-term it does not look as good as it ought to be. But again, all investments are of that nature, unless you are prepared to put it in the bank, and earn a couple of percent interest.”
“There is no such assurance. We could have lost it either or made more money. I cannot predict such suppositions.”
“I cannot predict 1995 or 1996, but the investment would not have been made if we did not have any assumption that it would be profitable in the longer term. But I cannot commit myself to specific dates, just as I think the Member would find it difficult to predict what is going to happen in the world in 1995.”
“It is a statement which is totally untrue. It is not to save the company. As I mentioned earlier, it was to restructure the debt, to lower the interest burden.”
“There was a proposal by Mount Charlotte to restructure its debt structure to eliminate a large amount of short-term debts at relatively high interest rates through the issuance of convertible bonds and it was the purchase of these bonds which accounts for this 1991 purchase.”
“Mr Speaker, Sir, to date the total investment in the Mount Charlotte Group is S$821 million or £274 million. No shares in Mount Charlotte have been sold so that there has been no realised loss. Mount Charlotte is a public limited company but its shares are not currently listed in the London Stock Exchange (LSE). The shares were previously listed in the LSE, but trading in the shares was stopped when the Brierley Group acquired 100% of Mount Charlotte's equity in December 1990. Shareholders' intention is for the company to be refloated at an opportune time in the future in a few years' time and to have its shares relisted on the LSE. Shares in Mount Charlotte were purchased as a long term investment. Therefore, the return from this investment can be determined when Mount Charlotte is relisted on the LSE. 1991 was the most difficult year for UK hotels in 30 years as the tourist industry was badly affected by the Gulf War and the UK recession. Even in 1991, Mount Charlotte operated profitably, increased its average room rate in the key London market and continued to achieve the highest returns on turnover in the industry.”
“The information requested for is as follows: Composition Fines collected by the Inland Revenue Department (IRD) and the Registry of Companies and Businesses (RCB) Department FY90 FY91p Apr-Jun 92p IRD $3,132,236.88 $3,357,576.64 $647,898.09 RCB $1,592,415.00 $1,753,935.00 $385,460.00 _________________________ p: Preliminary”
“REDUNDANCY PAYMENTS FUND (DISSOLUTION) BILL Order for Second Reading read.”
“The performance indicator of cost per revenue dollar collected applies only to revenue collected. If you have not collected it, that portion is missing. And that is why I said earlier, there are three criteria used - the number of assessments you can process, and hence the number of cases where you have successfully collected, and that cost is progressively decreasing. So it is efficient. But where the inefficiency arises is the inability to process about half the number of cases. So the need to process these half the number of cases, which account for the $1.14 billion worth of uncollected taxes, is the main reason why we want to convert from a Government department to a statutory board. And as I have said earlier in the Second Reading speech, the main reason is, as Mr Koo has noted, the Inland Revenue Department has been unable to recruit staff to fill the positions of substantial numbers of its key tax assessment and valuation people who have left for the private sector for much better salaries. A Government department cannot pay the sort of competitive wages to retain its staff because the question of relativity over the large civil service structure makes it impossible. Hence the need to convert to a statutory board which has much more autonomy in the selection of staff, in recruitment, not subject to Public Service Commission's criteria, and it can pay competitive wages outside the civil service structure. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Dr Richard Hu Tsu Tau]. Bill considered in Committee; reported without amendment; read a Third time and passed.”
“The balance of the staff which accounts for some 45% of the total staff of the Department, are support staff like clerks, record keepers, typists, and so forth, they are offered the option of either remaining with Government or transferring to the statutory board. But whether they choose to remain with Government or be transferred to the new statutory board, their rights and employment terms are protected fully.”
“I have quoted in the Budget debate the level of uncollected taxes, and the current figure is still around $1.14 billion of uncollected taxes a year. Mr Chiam also wanted to know why we need to collect more of the uncollected taxes because revenue collections are rising very healthily, and we have large balances and surpluses. Tax rates, as I said, are determined by Government, and Government's record in tax changes, I think, has been very satisfactory, in fact very generous, because over the past few years both corporate and personal taxes have been cut regularly. We have in fact not increased taxes other than those levied for specific social needs, such as petroleum taxes, liquor taxes, tobacco taxes and water conservation taxes. The fact that we are able, notwithstanding falls in taxes and cuts in taxes, to increase our revenue collections is because the economy has been growing very strongly, and Government has exercised very careful controls over expenditure; hence the surpluses. Finally, I would like to address the question raised by Mr Koo about concerns over protection of the staff of IRD who are being transferred to the statutory board. I have said earlier that all their rights will be preserved. There are two categories of staff in the Inland Revenue Department. Those who are considered to be Inland Revenue Officers - and these are people concerned with tax evaluation, property evaluation, and legal officers - this class of employees would be compulsorily transferred to the new Inland Revenue statutory board, because their services are essential to the functioning of the IRAS.”
“Here we conduct surveys of taxpayers to assess whether they are satisfied with the service that they are receiving from the Department from time to time. So there should be no change in the use of these criteria in evaluating the performance of the statutory board as opposed to the Department. Mr Leong also wanted to know whether the conversion will cost the Government additional money. Effectively, there will be no change whatsoever in the cost of collection other than the need perhaps to recruit additional staff in the future to make up for positions which have never been filled. But as far as the Government is concerned, we will try to ensure that the cost of collection does not increase the tax burden of the taxpayer. I now turn to the concerns raised by Mr Chiam. He was also worried that the transfer of the Department to a statutory board would mean an increase in both the tax collected from the public and wanted to know why it is necessary to sharpen the knife to collect more taxes since the Government is already collecting vast sums. I would like to assure him that the tax levying function is still retained by the Ministry of Finance, subject to the approval of Parliament. In other words, only the Ministry of Finance and the Government can propose tax changes which affect the tax payable by our citizens, and that is subject to final approval by Parliament. The IRAS has no power whatsoever to change tax rates. It merely collects what is due to the Government. Therefore, there is no question of a sharper knife needed, except to collect taxes which taxpayers already owed the Government, which they by law should pay but have remained uncollected because the staff of the Department are unable to process large numbers of cases.”
“Sir, I would like to thank Mr Leong and Mr Koo for supporting the Bill. I will try to alleviate Mr Chiam's concerns about the reasons for the change. Mr Leong was concerned about how the effectiveness of the IRD would be affected by the change from a Government department to a statutory board. Basically, the same criteria in evaluating and monitoring the performance of the IRD would be applied in the case of the Board. Do not forget, the Chairman of the Board will be the Minister for Finance and the Deputy Chairman is intended to be the Permanent Secretary (Revenue). So these are precisely the same people who are now concerned with overseeing the activities of the Department. In assessing the performance of the IRD, three basic criteria are used. The first is to assess the cost of collecting each dollar of revenue. In other words, we monitor the amount of money which the IRD, or the IRAS as a statutory board, consumes in collecting every dollar of revenue. So far, the performance has been good although it could be improved because a lot of taxes remain uncollected. Currently, the most recent figure is that for every dollar of revenue collected the cost is about three-quarters of one cent, which I think is very good by international standards. Secondly, another way of monitoring IRD's performance is in ascertaining the efficiency with which its assessments are processed and taxes collected. Here, as I have stated, the performance is not adequate at all because of a shortage of staff. Hence, the proposal to convert the department to a statutory board to allow it more flexibility to employ staff and pay them sufficient wages to retain them. A final criterion used to measure the performance of the tax collection department is the public satisfaction of taxpayers.”
“These officers will, however, have to be authorised by the Commissioner of Inland Revenue with the consent of the Attorney-General. Clause 26 also provides for the Authority's legal officers to represent the Government in any civil proceedings involving tax matters. This preserves the current position where legal officers of the IRD appear in tax cases before the Courts. In conclusion, I would like to say that this Bill will put our tax administration in a better position to cope with its heavy workload, and to meet future challenges it will face in the task of tax collection and administration. Sir, I beg to move. Question proposed.”
“The tax moneys collected by the Authority will be paid into the Consolidated Fund. The accounts for the Government's tax revenue and the Authority's internal funds will be kept separate. Financial statements relating to both accounts will be presented to Parliament each year. The financial statements of the Authority will be audited by the Auditor-General. Further details on financial provisions are set out in the Second Schedule, which follows the model provisions stipulated by the Auditor-General. I now turn to discuss clauses 18 to 24 which provide for the transfer of assets, liabilities and employees of IRD to the Authority. Under clause 18, the rights and obligations relating to IRD in connection with taxes or licence fees will remain with the Government and will not be transferred to the Authority. Under clause 19, such categories of staff in IRD as the Minister may determine will be transferred to the Authority on terms not less favourable than what they were enjoying before the transfer. Pension rights of these transferred officers will also be preserved. These are standard provisions which are also found in other Acts where Government departments were converted into statutory boards. The final part of the Bill from clauses 25 to 31 relate to general provisions. As the Authority is acting as an agent of the Government in tax matters, legal proceedings in such matters will continue to be brought by or against the Government, and not the Authority. However, since the Authority will be administering the Acts specified in the Third Schedule, its officers will continue to represent the Government in criminal proceedings for offences under these Acts.”
“It will also take over the other non-revenue functions currently undertaken by IRD such as representing Singapore in negotiations with other countries on the avoidance of double taxation, providing advice on property valuation, and the registration and supervision of charities. Under clause 9, the CEO of the Authority, to be known as Commissioner of Inland Revenue, will be responsible to the Chairman for the proper administration of the Authority's functions. The Authority will also consult the Public Service Commission before appointing the Chief Executive Officer. It is my intention that the CEO of the Authority will also be appointed as the Comptroller of Income Tax, the Comptroller of Property Tax, the Commissioner of Stamp Duties, the Commissioner of Estate Duties and the Commissioner of Charities. The CEO of the Authority will discharge the duties of these various statutory offices. This is in line with the current practice whereby the person holding the departmental title of Commissioner of Inland Revenue also holds these various statutory offices. With this arrangement, the powers to assess, collect and enforce payment of income tax will remain with the Comptroller of Income Tax. Similarly, such powers in relation to property tax will remain with the Comptroller of Property Tax. Therefore, tax returns and notices will continue to be in the name of the Comptroller, and not the Authority. There will be no change in the legal relationship between the taxpayer and the Comptroller after the Authority is established. Clauses 12 to 17 set out the financial provisions governing the Authority. The Authority, in return for the services it renders to the Government, will be paid an agency fee to finance its operations.”
“With the flexibility to formulate its own personnel policies and offer more competitive wages, it will be in a better position than as a Government department to compete with the private sector for its fair share of available talent in the market. It will be better able to attract and retain the right people to enhance its management and professional competence. These changes and improvements will result in tax revenue for the Government being collected more promptly. They will also benefit the public. Taxpayers can expect more responsive and better quality service. The conversion will, however, not affect the amount of taxes the public has to pay. The amount of taxes depends on tax policies and tax rates as decided by the Ministry and approved by Parliament. Sir, I would now like to draw the attention of the House to the main clauses of the Bill. Clause 3 establishes the Authority as a body corporate. Clause 5 provides that the Minister for Finance will be the ex-officio Chairman of the Authority. This is a necessary safeguard given the sensitivity of tax administration and collection. In addition to the Chairman, there will be four to six other members of the Authority, to be appointed by the Minister from among persons who have had experience in public administration, financial, tax or commercial matters. Among these members will be the Deputy Chairman and the Chief Executive Officer (CEO) of the Authority. Clauses 6 and 7 set out the functions and powers of the Authority. The Authority will perform the present functions of IRD in administering, assessing, collecting and enforcing payment of taxes. As a statutory body, the Authority will act as agent of the Government in these matters.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Bill before this House seeks to establish a statutory board to be known as the Inland Revenue Authority of Singapore. The new Authority will take over the existing functions of the Inland Revenue Department (IRD) and act as agent of the Government in administering, assessing, collecting and enforcing payment of income tax, property tax, stamp duties, estate duties and other taxes. IRD implements the Government's taxation policies. It plays a key role in collecting revenue to finance the operations of the Government. In 1991, IRD collected $7.85 billion or 56.4% of total Government operating revenue. From the Government's viewpoint, it is therefore very critical that IRD be prompt in its assessment and collection of taxes. IRD must be well managed and efficiently run. To enable IRD to respond to the changing operating environment, its line managers must be given sufficient manpower resources and expertise and the flexibility to manage them. There must also be adequate resources if IRD is to safeguard the integrity of the tax system. In its operations, the IRD has to deal with some 1.2 million income taxpayers and some 700,000 property taxpayers. This tax base is growing every year. As the tax payer population covers a wide spectrum of the public, ranging from individual taxpayers to big corporations, IRD must be able to provide a high standard of public service and be responsive to their needs. As a statutory board, IRD will be able to perform its functions more effectively.”
“The normal technical evaluation of developing a project is done in every case of a new venture. What is unpredictable is the market condition when the ventures move actually into operation. It is not possible to predict ahead of time whether by year X or after start-up, the company will remain profitable. I will give you an example of the sort of uncertainties faced by operating companies in high-tech areas. The Petrochemical Corporation of Singapore (PCS), in which the Government had equity. During the early years, 1984-86, it accumulated total losses of $120 million before it turned the corner, because it started operations during a downturn of the petrochemical industry. Another example is Keppel Corporation in which the Government has a majority interest. In 1984, it took a write-down of $174 million because the bulk carrier, tanker business, was highly unprofitable and it wrote off a series of tankers. In the following year, 1985, it had to write off an additional $130 million, again for the same reason. Thereafter, it has been profitable.”
“The investigation clearly shows the source of expenditure is for pre-operating expenses and capital expenditure. It shows that the sales did not meet operating expenses. There is nothing technically incorrect with it. If such is the information that is required, there is no problem.”
“These funds were initially contributed as capital by the Government and include a portion of loans extended to the company and they form part of STH group's financial assets.”
“I do not think that is something which we want to publish. It is an internal investigation. The Ministry is satisfied, so is the Board of STH.”