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.”
The complete record
Every one of 2,807 lines we hold for Richard Hu Tsu Tau, in date order, each linked to its source. Free to read, in full, without an account. Page 42 of 57.
“Now, Sir. I beg to move, "That the Bill be now read a Third time."”
“Mr Speaker, Sir, am I supposed to respond to that?”
“Mr Speaker, Sir, I do not quite know how to respond to Dr Lee's statement. My only conclusion must be that he is trying to hog television time. I fail to understand him. He cannot even contain himself. He was laughing. So obviously he does not really mean what he says and he does not believe in what he is saying. I do not think I should dignify his statement with a proper reply. All I need to say is that the purpose of the Bill is to improve the operating efficiency of the PSC. It increases the number of members from 11 to 14 so that there will be more people available to work on the two sub-Commissions and ease the workload on the Commission as a whole. I think, by and large, the public will welcome this specialisation and the creation of the two sub-Commissions which will then be able to spend their time to specialise in the problems of the teaching profession and, of the uniformed services. As far as Dr Arthur Beng is concerned, I would be pleased to convey his feelings to the Chairman of PSC.”
“The PSC will retain the authority to appoint and promote officers into the top post in each of the services delegated to the two sub-Commissions. Disciplinary cases will also not be devolved to the sub-Commissions, to ensure uniform standards of discipline and punishment in the Civil Service. As the number of disciplinary cases is small, they can be effectively handled by the PSC. Existing powers of the Commissioner of Police to discipline junior police officers will remain unchanged. Section (6)(b) in Article 110C of the Bill stipulates that the first Chairman of the two Commissions may be appointed for a period of less than three years. This is to enable the Government to appoint the Chairman of the PSC himself to chair the two new Commissions in their first year of operation, to help them get off the ground and to establish a common frame of reference. Thereafter, separate Chairman will be appointed to the two sub-Commissions. Sir, I beg to move. Question proposed.”
“The bulk of Education Officers are good classroom teachers who wish to remain as teachers. The service must be able to identify the best, those with the aptitude and temperament, to take on leadership roles. At the same time, the majority of classroom teachers must be motivated to continue performing well in class while remaining essentially in the same job until retirement. The Police and Civil Defence Services, comprising Police, Narcotics, Prisons and Joint Civil Defence Services, number over 10,000. This group of services is also quite distinct from the rest of the Civil Service. They are paramilitary in nature, and are subject to special codes of discipline under their own organisational Acts. They have greater difficulties in recruitment and retention as a result of the additional demands of the uniform and the nature of work. Each of the two groups of services have the critical mass to justify having their own Commissions. Together, they comprise half the total number of civil servants, and two-thirds of Division I officers. The PSC will then be left to manage a much more compact group of about 34,000 civil servants, including 4,000 Division I officers. The creation of the two Commissions will therefore not only improve the image and staff morale of the services involved, but also lead to more responsive personnel management for the rest of the Civil Service. Having completely separate Commissions may result in uneven standards and unnecessary competition for the same scarce manpower. To avoid this, it is intended that each of the Commission will be chaired by a PSC Deputy Chairman and with two of its members being drawn from the PSC.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Public Service Commission is vested with the authority to appoint, confirm and emplace civil servants on the permanent or pensionable establishment and is also responsible for the promotion, transfer, dismissal and the exercise of disciplinary control over them. With about 70,000 employees organized into 158 schemes of service, the management of the Civil Service is a complex and massive task. The PSC has had difficulty coping with its heavy work load for some time. PSC members spend an average of 100 afternoons per year on Commission matters. This makes it very difficult to find suitable persons to serve on the PSC. This Bill therefore proposes to amend Article 105 (1) of the Constitution to allow an increase in the number of PSC members (excluding the Chairman) from 11 to 14. This increase will help to ease the work load on individual members. To further improve the responsiveness and effectiveness of Civil Service personnel management, this Bill also proposes the setting up of two sub-Commissions of the PSC: the Education Service Commission and the Police and Civil Defence Services Commission. Members of these two Commissions will be able to concentrate their attention on the staffing position of the services under their purview. With such specialisation, members will gain a better understanding and be more responsive to the peculiar needs of these services, and thus be able to address their problems more effectively. The services placed under the two Commissions form a substantial proportion of the senior officers in the Civil Service. The Education Service has a population of over 21,000, It forms the largest group in the Civil Service. It is unique.”
“Sir, I beg to move, "That the Bill be now read a Third time." Question put, and agreed to. Bill accordingly read a Third time and passed. ACKNOWLEDGEMENT TO THE CHAIR”
“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 Clause 2 of Article 145 and Clause 2 of Article 147 of the Constitution of Singapore for additional expenditure in excess of the provision authorised by the Supply Act, 1989. The additional sum has been scheduled as a Supplementary Main Estimates which has been considered and approved by the House as Command Paper No. 4 of 1990. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time. Third Reading”
“Sir, I beg to move, "That the Bill be now read a Third time." Question put, and agreed to. Bill accordingly read a Third time and passed. SUPPLEMENTARY SUPPLY BILL Order for Second and Third Readings read.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." In accordance with Article 145 of the Constitution of Singapore, heads of expenditure to be met from the Consolidated Fund other than statutory expenditure have to be included in a Bill to be known as the Supply Bill. The purpose of the Supply Bill before Members is therefore to give legislative approval to the appropriations from the Consolidated Fund to meet expenditure in the financial year 1st April, 1990 to 31st March, 1991. The heads of expenditure and the sums that may be incurred in respect of each head are shown in the schedule to the Bill. These have been approved by the House in the Main Estimates of Expenditure for the financial year 1st April, 1990 to 31st March, 1991, and appear on page 47 of Command Paper No. 6 of 1990. The Supply Bill, when approved, will empower me to issue warrants, authorizing expenditure up to the amount for each head as shown in the Bill to be paid out from the Consolidated Fund. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time. Third Reading”
“Sir, I beg to move, "That Parliament doth agree with the Committee on the said resolutions." Question put, and agreed to. Resolutions accordingly agreed to. SUPPLY BILL Order for Second and Third Readings read.”
“Mr Speaker, Sir, I beg to report that the Committee of Supply have come to certain resolutions. First Resolution reported - "That the sum of $7,511,972,950 shall be supplied to the Government under the heads of expenditure for the public services shown in the Main Estimates for the financial year 1st April, 1990 to 31st March, 1991, contained in Paper Cmd. 6 of 1990." Second Resolution reported - "That the sum of $5,665,020,600 shall be supplied to the Government under the heads of expenditure for the public services shown in the Development Estimates for the financial year 1st April, 1990 to 31st March, 1991, contained in Paper Cmd. 6 of 1990."”
“Sir, I suggest Dr Lee should do a little more careful marketing, because his $50 does not seem to last very long. Perhaps he needs advice on this. As far as the salaries of Ministers are concerned, it has no bearing whatsoever on the living cost of pensioners. And I think this had been explained at length, so I do not want to dwell on this.”
“This is something probably he is not aware of. Taking rice, for example, 100% Thai rice cost $1.14 per kilogram in 1980, it costs 87 cents today; wheat flour, 83 cents per kilogram in 1980, 80 cents today; bread has gone up from 60 cents per 400 grams loaf to 72 cents, a period of 10 years; lean pork per kilogram, $6.53 in 1980, $6.54 today; fresh beef, $11.33 in 1980, $13.02 today (an increase no doubt, but less than 15% over 10 years); chicken per kilogramme, $3.95 in 1980, $4.21 today (increase of 7% over 10 years); hen's eggs, $1.47 per 10 eggs in 1980, $1.47 per 10 eggs today; cooking oil (2 kilogramme), $5.46 in 1980, $5.25 today; sugar per kilogramme, $1.74 in 1980, $1.17 today; condensed milk per tin has gone up a bit from $0.93 to $1.14 today. I think the situation is not as bad as he makes it out to be. Undoubtedly, in an economy which is rising rapidly, there will be inflationary costs in the higher cost items, particularly imported goods. And I think where basic living costs are concerned, the Government has managed the economy, very satisfactorily.”
“Sir, Dr Lee has raised this issue in last year's budget debate and again in January this year. As I explained at that time, the Singapore Allowance was last increased in 1986, and between 1986 and today the increase in basic living cost has not changed sufficiently to warrant an immediate adjustment at this time. Members will recall that the Singapore Allowance was first introduced in 1974 to assist pensioners in the lower pension groups in the then abnormally high inflationary situation. Since that time the allowance has been increased three times in 1980, 1982 and 1986. I would like to assure Dr Lee that I am not unsympathetic to the problems of the lower income pensioners and that my Ministry monitors the cost of living changes regularly and would make adjustments when this is necessary. However, Dr Lee should get his facts straight about cost of living data, particularly he should not just quote CPI figures and make general statements about cost increases. Whilst I agree that in some sectors of the Singapore economy costs have gone up, this has been largely confined to those establishments and goods catering to the middle and high income groups. As the Minister for Trade and Industry mentioned yesterday, Singapore has one of the lowest inflation rates in the world and the CPI for the lower expenditure groups in fact is even more stable. He has noted that bus fares have not changed since 1982 and neither have in any significant way, any rises in the basic living cost in HDB establishments. I have data on price increases for some basic food items which Dr Lee may be interested in, to illustrate what I mean. Taking 10 general items of basic goods, five have increased significantly since 1980, one stable, and four have gone down in price.”
“Well, I would like to know where this money is going to come from. I think it will also be unwise to use earnings of these reserves as a substitute for future possible consumption tax, as advocated by Dr Augustine Tan. As our economy grows, the size of our reserves must also grow if we are to maintain the same ratio of reserves to imports. On the 5-day week, I will run through it very quickly. The Government has no present plans to change to a 5-day week. Experience in the private sector has shown that the change-over to a 5-day week usually leads either to a reduction in total working hours or at least a reduction in total output. And this will certainly aggravate the present shortage of staff in the civil service and will lead to a lowering of quality of service in the public sector. The 5-day week is not such a widespread practice in the private sector as generally believed. A Ministry of Labour survey has shown that most Singaporeans still work a 5 1/2-day week. Those which work a 5-day week are generally the larger companies, mostly multinationals. I accept that the 5 1/2 day week will probably lead to more leisure and opportunity to improve on the quality of life, but I think even within a 5-day week there is still considerable room for improvement in these sectors anyway. So let us use what time we do have now to improve on the quality of life.”
“My apologies, Sir. This is a comfortable level. I think we should maintain this. For these reasons, we should not allow our reserves to be drawn down to finance recurrent expenditures, as advocated by Mr Chiam and also repeated by Dr Lee Siew-Choh.”
“Under the Currency Board system which we operate, every Singapore dollar issued must be backed by an equivalent value of gold or foreign exchange. Thirdly, we need to give backing for foreign assets in Singapore. The existence of such backing provides foreign investors with the confidence to allow them to continue to invest. At the present time, our crucial foreign external reserves amount to some S$40 billion, and this is equal to about five months of total imports or over six months of retained imports.”
“As wages rise with economic growth, as they should, the cost of this will eventually have to be recovered through increases in public charges. Not to do this will mean increasing continually public subsidies and an increasing Government claim on the nation's resources, and this will eventually return to haunt the taxpayer through increased taxes. However, such adjustments in charges, when they prove neces- sary, will be only to offset cost increases and not to increase revenue and will take into account the ability of the lower income group to pay for such services. The third financial objective of Government is to maintain an adequate level of national reserves. Members will be aware that we import most of the food we eat and all the energy we consume because we lack natural resources. We also import most of the raw materials for manufacture and much of the capital goods we need. For this reason, we have always run a deficit on our trade account. Up until 1986, we have also run substantial deficits on our current account and until that year our overall balance of payments was only in surplus because of substantial inflows of foreign capital in the capital account mainly because of large foreign investments into Singapore. Because of this, we need to maintain an adequate level of foreign reserves for the following three reasons. First, we need a financial buffer against a temporary crisis in the international economy. In such a situation, Singapore may not have sufficient export income to pay for all its imports and will have to fall back on its reserves. Second, we need to provide backing for the Singapore dollar or currency in circulation.”
“Government's second financial objective is to ensure that Government's expenditures do not grow out of line with the growth of the economy. Every Ministry or Department is allocated specific expenditure to GDP ratio targets. At the beginning of each budget cycle, Ministries and Departments work out internally their recurrent and development expenditure requirements. On recurrent expenditures, the first step is usually to review existing programmes to weed out redundant activities and to improve work methods so as to release resources for new programmes. Where such internal re-allocation proves insufficient, additional manpower and other resources will be made available, as has happened, as I have said earlier, to the programmes for the Ministries of Education, Home Affairs and Community Development. In the case of development expenditures, each Ministry and Department goes through the same process in evaluating the new projects it wishes to implement and tries to accommodate this within their existing expenditure to GDP target allocations. Where this is insufficient to cover all worthwhile projects, incremental allocations will be made from a central pool. If the current year's revenue cannot cover all such development projects, borrowings against reserves would be quite in order for projects which have economic value. Examples will be funds borrowed for public housing, land reclamation, airport extension and so forth. Associated with the objectives of keeping Government expenditures under control is the need to regularly review the charges for Government services. Having taken all steps to trim fat from operating budgets, there are increases in recurrent costs which cannot be avoided altogether, such as wage cost increases.”
“On the other hand, Government's expenditures are much more inelastic and tend to grow steadily year after year, reflecting annual wage increases and the increasing demand for public services. This means that when revenue collections are buoyant during good economic years, the budget will usually be in surplus. But when the economy slows, as during recession years, budget deficits will appear. When surpluses are realised, the Government's policy is to set aside part of the surpluses to cover possible future deficits in down years and to return the balance to the private sector through cuts in corporate, personal income taxes and assets taxes, and there have been many recent examples of such tax cuts. So I do not understand Mr Chiam's claim that PAP continues to tax in order to achieve a budget surplus, and Dr Lee's claim last week that Government only takes and never gives. Turning now to Mr Chiam's claim that the Government regularly increases taxes and levies in order to raise the revenue, I assume that he is referring to the charges levied on motor vehicles and on foreign workers. As I explained in the Budget debate, these are not revenue-raising measures but are financial measures introduced to achieve certain social objectives. For these reasons, the revenue gained cannot be relied on for the long term as the social objectives could change. In the case of motor vehicles, substantial changes have already been announced. In the case of foreign workers, a levy is the most efficient way to distribute and allocate a limited resource. The alternative of direct allocation would raise not only horrendous problems of administration but would also have the undesirable effects of depressing the wage levels of the Singapore workers. I am sure that is not what he wants.”
“The Government's policy on civil service manpower is basically one of restraint and not of reduction. I believe that the quality of service has not suffered because most Ministries faced with restraint on manpower increases have turned to automation to improve their productivity and to using computerised systems to simplify their work. My Ministry is also very sensitive to the needs of particular Ministries for new additional manpower and these have in fact been granted where conditions warrant it. And I think the Member should note that additional manpower has been allocated to the Ministries of Community Development, Home Affairs and Education. Under the Block Vote Allocation System, Ministries have considerable autonomy in the deployment of staff within their Ministries provided they stay within their total allocated resource numbers. I will now take up the points raised by Mr Chiam because I want to answer in some detail in order to correct some of his misapprehensions about the way in which Government runs its fiscal affairs. Mr Chiam seems to be under the impression that Government deliberately sets out each year to generate large budget surpluses and does so by regularly increasing taxes, levies and a whole range of charges in order to get the surpluses. I want to say categorically that this is not the case, and I will explain why. The Government has three broad financial objectives. The first objective is to maintain a balanced budget over the long term. And by a balanced budget, I mean that the Government's recurrent and development expenditures should be financed from direct tax and indirect tax revenues. Revenue collections are generally strongly co-related with economic growth and tend to move up and down with economic growth cycles.”
“In the meantime, selected public service officers have for many years been serving on Government-linked companies as nominee directors from which they have gained invaluable experience in the workings of the private companies. Civil servants are also encouraged to work closely with the private sector. Departments which are closely involved in promoting our economic development or regulating the conduct of business have specialised training attachments for their officers in relevant fields, for example, officers in the Commercial Affairs are regularly attached with the US Security Exchange Commission. And in the case of the Inland Revenue Department, they also meet regularly with their international counterparts to examine complex tax issues and to ensure our tax system keeps in step with the changes in the business environment worldwide. I can assure the Member for Pasir Panjang GRC that we are continually reviewing the training programmes and development programmes for our staff. Finally, a booming economy has seen much greater competition for scarce human resources in our country. The civil service faces a problem. It would need to review its salaries and terms of service to retain the staff it needs to operate. In this connection, the number of scholars which the Government has retained over the years is roughly 50%, which means that the division between the private sector and Government in retaining these high quality staff is about even. Mrs Yu-Foo Yee Shoon has expressed concern that in view of Government's manpower restraint policy there should be no indiscriminate cut in staff, particularly for those Departments and Ministries which are dealing with public services. I can assure her that this will not be the case.”
“Sir, I will first deal with the questions raised by Mr Bernard Chen and Mrs Yu-Foo Yee Shoon on the development and use of civil service manpower. In Singapore, we are faced with the problem of a small population with a limited talent pool. As Government is committed to the development of the private sector as the main engine for growth, it decided a few years ago on a policy of zero growth in the civil service manpower numbers. With this policy, the only way in which the civil service can cope with increasing demands on quality and range of services is to continually upgrade the skills of its staff through training and development. This is therefore part and parcel of our manpower development programme in the civil service. The Government has spent more than $9 million in fiscal years 1987 and 1988 on staff development covering both local and overseas training programmes. In fiscal year 1989, provision for this was increased to $16 million and it will be further increased to $20 million for fiscal year 1990. These are direct costs excluding administrative costs and absentee payroll costs. In addition, the Civil Service Institute organises and conducts over 1,000 courses per year, training some 5,000 senior civil servants and 22,000 officers in other divisions. The target for training activities in the civil service has been set at an average of 5% of the annual working hours of each officer. A staff exchange scheme between the civil service and selected private sector companies was drawn up by the Public Service Division in 1987. However, this programme was not initiated because of staff shortages at that time. As soon as the staffing position improves, the Public Service Division will resuscitate the programme.”
“Mr Yeo Toon Chia asked the Minister for Trade and Industry how many complaints against unscrupulous shopkeepers were received from tourists in 1987, 1988 and 1989; what action had been taken by the Singapore Tourist Promotion Board against these errant shopkeepers; and what measures are being implemented by the STPB to investigate tourists' complaints within 24 hours. The Minister of State for Trade and Industry (Mr Mah Bow Tan) (for the Minister for Trade and Industry): Mr Speaker, Sir, in the past three years, the Singapore Tourist Promotion Board has received the following complaints against shopkeepers: 1987 - 507 1988 - 612 1989 - 644 The complaints have increased because more tourists are visiting Singapore. However, as a ratio of visitor arrivals, the figure has been fairly constant, at about one case per 7,000 visitors. When a tourist complains to STPB against an unscrupulous shopkeeper, STPB contacts the shop concerned to arrange for an amicable settlement. And about half the cases are resolved this way. But if a settlement cannot be reached, for example, where there has been a breach of contract or misrepresentation, STPB advises the tourist to lodge his complaint with the Small Claims Tribunal. The Small Claims Tribunal will schedule hearings within 24 hours to deal with complaints from tourists who are still in Singapore. For more serious complaints, eg, involving criminal assault of tourists by salesmen, if necessary, STPB will fly in foreign witnesses to testify in court. Since May 1989, the Consumers' Association of Singapore has been handling tourist complaints on behalf of STPB.”
“Mr Speaker, Sir, the Government's external reserves are invested overseas in assets denominated in a mix of major foreign currencies. The returns from these investments are in two parts - investment income and investment adjustments. Investment income comprises interest earnings from bonds and other fixed income instruments, dividends from equities and rental income from property assets. Investment adjustments refer to the capital gains or losses realised when assets are sold and to the profits or losses arising from foreign currency movements relative to the Singapore dollar. In the recession years of 1986 and 1987, the major foreign currencies strengthened against the Singapore dollar and this resulted in exceptionally high foreign exchange gains and consequently buoyant income from investment adjustments. In 1988, following recovery from the recession, economic growth in Singapore rebounded strongly. The Singapore dollar reversed direction and strengthened significantly against major foreign currencies. As a result, net income from investment adjustments was much lower in Singapore dollar terms. Foreign exchange movements are inherently unpredictable. Therefore, there can be no guarantee that there will always be substantial foreign exchange gains on our investments. I can assure the Member, however, that the Government will continue to pursue a prudent strategy in the management of its overseas assets. Our aim is to maintain a good overall rate of return on our investment portfolio. COMPLAINTS BY TOURISTS AGAINST UNSCRUPULOUS SHOPKEEPERS 2.”
“We will continue to invest in our people by promoting family formation. In this respect, I have introduced additional measures to supplement the existing set of incentives for procreation. With all these measures in place, I am confident that there will be another year of good growth. This will bring us a step closer to being a developed nation. [Applause], Question put, and agreed to. Resolved, That Parliament approves the financial policy of the Government for the financial year 1st April, 1990 to 31st March, 1991. ADJOURNMENT Resolved, "That Parliament do now adjourn." - [Mr Wong Kan Seng]. Adjourned accordingly at Three Minutes to Three o'clock pm. Committee of Supply - MAIN AND DEVELOPMENT ESTIMATES OF EXPENDITURE FOR THE FINANCIAL YEAR 1ST APRIL, 1990 TO 31ST MARCH, 1991 (Cols. 163 - 166)”
“I will leave my colleague, the Minister for Health, to answer this question in detail during the Committee of Supply. My only comment is that the proper measure of the quality of health services for a country should not be measured simply in terms of the amount of money spent, but what the country gets out of what it spends. I would hazard to say that the level of health services in Singapore is amongst the highest in the world. Statutory and Government charges. The Member for Tanglin has expressed concern that statutory boards and Government departments are raising fees and charges in spite of Government accumulating surpluses. He has suggested that such fee increases be coordinated in the future. I would like to point out that the revenue from Government fees and charges has remained fairly constant over these years at around 12% of recurrent expenditure. In other words, Government fee increases have just managed to keep pace with increases in manpower and other operating costs in the public sector. My Ministry monitors fee increases closely and clears all major revisions. I would like to assure the Member that any adjustment made will not be unduly onerous or affect our international competitiveness. Finally, Mr Speaker, Sir, we have had three years of impressive economic growth. Few would dispute that this is largely due to the Government adopting the correct economic strategy allied with a receptive, hardworking and supportive population. However, this growth would not have been feasible if our people have not shown considerable resilience, initiative and enterprise. This budget should help maintain the momentum of growth. Additional fiscal changes and incentives were introduced to further stimulate the private sector.”
“It should come as no surprise that his comment displays a complete and sad lack of understanding of the nature of Singapore's public debt transactions and expenditure. The budget allocation for debt servicing in FY 1990 is indeed $6 billion, of which $1.8 billion is for interest payments. The balance represents contributions to sinking funds set up to repay borrowings when they are due. Nearly 80% of the bonds issued by the Government are to the CPF Board in exchange for the Board's surplus funds. Most of the expenditures on interest payments and sinking fund contributions are therefore related to the servicing of bonds issued to the CPF Board. The bulk of public debt expenditure thus flows back to the CPF accounts of individuals and can be withdrawn for housing, Medisave and other approved purposes. A greater part of other bonds issued by the Government are bought by financial institutions to meet their statutory reserve requirements. Overall, the public debt does not impose a burden on taxpayers. Dr Lee has also criticised the Government's defence expenditure which he claims is excessive. It will be superfluous for me to defend our defence expenditure requirements as the Second Minister for Defence (Services) had earlier in this House given an eloquent explanation. Suffice it to say that Dr Lee would not be living in the same Singapore he now knows and enjoys without the SAF we now have. Confidence is a very fragile commodity. I am sure all Singaporeans sleep better with the SAF around. Dr Vasoo is also concerned that not enough money has been allocated to health expenditures and he quoted figures to show that many other countries spend much more of their GDP on health.”
“Additionally, if aggregate savings were to be positive, the expenditure tax rate will generally have to be higher than on income to generate the same revenue. In international relations, income tax has the advantage of being widely accepted. An expenditure tax has to be imposed on a residence basis. It will therefore lose all tax treaties and benefits that accrue. I should point out also that only India and Sri Lanka experimented with expenditure tax and both almost immediately abandoned it. At present, no country in the world has it. We would do well to let other countries take the lead in this respect. Budget allocations and expenditure priorities. Some Members have expressed concern that the budget allocations for the coming financial year do not provide enough for health, education and social services. Let me assure Members that this is not so. Expenditure on these sectors currently accounts for 31% of total expenditure or 7.4% of GDP. With expansion and upgrading of educational programmes and improvements in health care and social services, the share of the budget for these sectors will increase. In particular, the expenditure on education would rise to 4% of GDP, that of health to 1.1% and for community and social services, to 1/2% of GDP. These represent significant increases over present allocations. The Non-Constituency Member, Dr Lee Siew-Choh, has commented that the allocation for debt servicing was excessive. He seems to be under the impression that debt servicing costs are a burden on all taxpayers, especially for those in the lower income groups, while the beneficiaries are rich individuals who could afford to buy Treasury bills and Government bonds.”
“I would like to assure the Member that there will be ample time for public discussion and debate. Government is committed to obtaining feedback and will take into account all useful views in designing the tax. The Member for Cheng San GRC, Mr Heng Chiang Meng, has suggested an expenditure tax in place of the consump- tion tax. Under the concept of an expenditure tax, all receipts from current net income, sales of assets, borrowings, gifts and other sources are aggregated and deductions allowed for gross savings in the form of investment outlays and debt repayment. Tax is then assessed on the balance representing taxable consumption expenditure. Although the concept of an expenditure tax appears superficially attractive, I do not think the Member has really thought through its implications, because, in practice, difficulties in assessing tax are greatly increased for both the taxpayer and the tax collector. Many citizens would consider that having to account in detail for every item of expenditure will amount to a massive invasion of privacy. The opportunities for tax under reporting and tax evasion would be greatly increased. There would also be many administrative problems involved. Those expenses which qualify for exemption or deduction present much the same problems as encountered today. How much should we allow for medical, education, legal, religious and similar expenses will have to be considered. Problems will also arise in respect of treatment of long life consumer goods such as housing. There will have to be provisions for spreading outlays over a period of years by averaging and some sort of taxation of the annual imputed value has to be devised.”
“Wherever possible, the timings will take into account the budget cycle. Land transport policy is a complex and many-faceted problem which would have been difficult to time closely with budget cycle. The recent Select Committee hearings on the quota system and the policy decisions which emerged are a good example of the process which could not have been handled adequately during the annual Budget debates. With the implementation of the quota system to control vehicle growth, and supplemented in future by the electronic road pricing system, there should be much less need to introduce periodic and drastic changes in ARF fees or road tax increases on budget or off-budget. With these new systems installed, vehicle owners will have much more control over their own expenditures on vehicles and road transport costs. Consumption tax. Some Members have again expressed concern over the Government's plan to introduce a comprehensive goods and services tax. As I have mentioned in past budgets, every effort will be made to ensure that the less desirable side effects are mitigated. The proposal has received severe criticism from Dr Lee and Dr Tan for a variety of reasons, mainly centred around their regressivity, the fact that they are messy and likely to affect tourism. These problems are recognised and it is precisely for this reason that the Government has decided to introduce legislation this year without the need to actually implement it. The feeling is that this will provide ample opportunity for the widest public debate and feedback without the emotional over-hang of immediate application. The Member for Tanglin has suggested that dialogue sessions be held before legislation is introduced.”
“Off-budget operations. Mr Chandra Das and other Members have expressed concern that many Government-mandated cost changes have been made outside the budget and that these changes are very disruptive to business planning and pricing. The three off-budget changes of concern are the increases in employers' CPF contribution, increases in the foreign workers levy, and changes associated with the Government's land transport policy. I would like to assure Members that it is not the Government's intention to deliberately hit business with unanticipated and sudden cost increases, and to smuggle such changes outside the budget. Members should understand that although all the three changes have financial consequences, none are introduced specifically for revenue or budgetary reasons. I will explain. The increases in employers' CPF contribution introduced in the last two years were steps in a process of restoring the drastic cut in CPF which our workers accepted as part of their contribution to getting Singapore out of the recession. The increased contributions were introduced in stages and as soon as economic conditions allowed, so that workers could enjoy their rightful entitlement as early as possible without having to wait for the annual budget cycle. However, in recognition of the concerns of businessmen, future moves towards a long-term rate of employers' CPF contribution will be announced well in advance so that they can be taken into account in wage calculations. In the case of the foreign workers levy, depending on the economic performance and the demand for foreign workers, the levy may have to be adjusted from time to time. Levy changes in the future will con- tinue to be made with sufficient advance notice.”
“Parents with children in private child-care centres can also avail themselves to this subsidy provided these centres meet the Ministry's requirements. The Member may also wish to note that Government expects to spend about $9 million on such subsidies this year. This amount is likely to exceed $14 million in the coming financial year. Some Members have suggested that the tax relief for the foreign maid levy should also be extended to widowers and divorced men with children. I should like to point out that this relief was intended to assist mothers to continue working by offsetting part of the higher cost of engaging foreign domestic help. A secondary objective is to encourage married women to have more children. Extending the tax relief to widows and divorced women with children is consistent with the main objective. Both objectives would not be relevant in the case of divorced men and widowers, the majority of whom are already in the workforce. Turning to tax reliefs for aged parents and handicapped dependants, Dr Lee Siew-Choh has called for such reliefs to be increased. I must reiterate here again that reliefs are not meant to offset entirely the cost of looking after the elderly or disabled. Government has been doing its part by increasing these reliefs last year and this year. Family members should shoulder part of the cost of looking after these people too. The Member for Yio Chu Kang, Mr Lau Ping Sum, has suggested that reliefs be increased on a case-by-case basis for taxpayers with parents or dependants requiring extensive medical treatment. Basing the quantum of relief on the extent of medical expenses would be administratively very cumbersome. Allowing the same quantum of relief to all taxpayers eligible for the relief is both fair and equitable.”
“However, I should like to point out that the reliefs are not meant to offset entirely the financial burden of raising a child. Parents should rightly bear a fair share of the costs. We must also not forget that while costs have risen over the years, wages have gone up even faster. As a result, most Singaporeans have enjoyed substantial real wage increases every year. Last year alone, real wages increased by over 10%. The Member for Tiong Bahru GRC, Dr Vasoo, has suggested that paid maternity leave be given for births of third and fourth child. I should like to point out that incentives for the third and fourth child are really directed at parents who can afford to have the third and fourth child, and therefore are in a position to take advantage of tax rebates. It is clearly not in the interest of the parents nor the children for parents who cannot afford to have the third and fourth child. Some Members have also suggested that tax incentives be introduced to encourage employers to set up child-care facilities for their staff. There are a number of tax deductions available to employers to set up child-care centres. For example, expenses incurred in operating the centres are tax deductible and the capital expenditure incurred in setting up these centres could qualify for industrial building allowances. Besides tax measures, support is also given by the Ministry of Community Development to employers to set up child-care facilities. Such support would include subsidies to meet initial operating losses and the release of HDB and other Government premises for the development of child-care centres. In addition, the Ministry of Community Development also subsidizes the payments of fees by parents to all approved child-care centres.”
“As I mentioned in my Budget Speech, survey findings showed that the later a mother has a second child, the less likely she is to have a third. By tying the tax rebate for the second child to the age of the mother, we hope to encourage not only earlier child-bearing but also families to have more children. The Member for Tiong Bahru GRC, Dr Vasoo, commented that the rebate was half-hearted and measured. He suggested increasing the quantum for each tier of the rebate by $5,000. I believe that the present quantum of the rebate is already generous so that there is no present need to change the quantum. As for the suggestion to backdate the second child rebate to before 1990, the cut-off date of 1st January 1990 is already a concession as it would result in many parents having a second child in 1990 receiving a tax break. In the case of the fourth child rebate, it was backdated to babies born in 1988 to enable families who had responded positively to our new population policy to qualify for the rebate. The Non-Constituency Member, Dr Lee Siew-Choh, has claimed that the incentive for the second child is discriminatory as it is aimed at parents who are better educated. This is not true. There are no education criteria for parents to be eligible to claim the tax rebate. Our statistics indicate that of all the taxpayers claiming the tax rebate for the third child in the Year of Assessment 1988, about 45% have at most a secondary level of education. The Member for Yuhua has expressed concern over the rising costs of bringing up a child. To offset part of this increase, she suggested that child relief should be raised. I agree with the Member that costs have risen over the years, and I have recognised this by raising the normal and the enhanced child reliefs last year.”
“Instead of increasing personal reliefs, we have preferred to reduce the overall tax burden for everyone by lowering tax rates at all levels over the years. Dr Lee has also claimed that all tax cuts have favoured the rich. The facts are that the main burden of personal income taxes falls on the higher income groups. For example, taxpayers with chargeable incomes above $75,000 per year and account for only 2% of total taxpayers pay over 50% of total personal taxes collected. Looking at it from another angle, taxpayers with chargeable incomes below $10,000 per year and account for some 70% of taxpayers pay around 7% of total taxes collected. The introduction of the tax rebate for the second child has attracted considerable interest. Members are concerned that the rebate would benefit only a small group of parents. To enable more families to qualify for the rebate, it was suggested that the age criteria for the mother be removed. Some Members have suggested that the rebate be backdated to enable families who have their second child before 1st January 1990 to qualify for the rebate. I would like to assure Members that a substantial number of families will benefit from the tax rebate for the second child. In the last three years, more than 60% of second order births occurred to mothers before the age of 31. This proportion is expected to rise as more parents respond to the incentive. Removing the age limits for the second child rebate would turn this incentive to one of merely encouraging families to have two children. There is no compelling reason for the Government to do this as almost 80% of families would eventually have at least two children. The main problem is a steady increase over the years in the age of mothers at second birth.”
“Some Members have suggested that the top personal tax rate of 33% be brought down to the level of the corporate tax rate of 31% to discourage individuals from forming companies to take advantage of the lower corporate tax rate. The present 2% difference between the top personal and corporate tax rates may appear advantageous for individuals, at least for tax purposes, to carry out business by way of a company. However, on closer examination, this need not necessarily be so. Due to our graduated personal tax rates, the effective rate for individuals in the highest tax bracket is considerably lower than 33%. As such, there should not be any significant tax advantage for the self-employed to incorporate their business, apart from the cost of incorporation. The NCMP, Dr Lee Siew-Choh, has called for higher personal tax reliefs as he claims existing reliefs are derisorily low and have remained unchanged for many years. As I have mentioned in the House several times in the past, the Government's policy is that as many citizens as possible should pay some tax, however small, so that there would be a shared awareness that Government revenue is not manna from heaven. We therefore need to maintain as wide a tax base as possible. Increasing personal reliefs available to all taxpayers would lead to a significant reduction in our tax base. For example, if personal relief is doubled from the current $2,000 to $4,000, the tax base would be reduced by nearly 16% from its present level of 885,000 taxpayers. We have avoided this by maintaining a tax schedule with an effective tax rate below 3% at the bottom, and rising steeply to 33% at the top.”
“I agree with Members that we have reached a stage in our development where we can and should devote more attention to improving the quality of life. Government will be committing more funds to improve facilities for the culture and arts. In addition, the Economic Development Board has recently set up a Creative Services Unit to look into various initiatives to promote commercially viable and economically beneficial creative services, such as the performing arts. Entertainment duty was reduced substantially in April 1985 to 10% from 35%. This was in recognition of the importance of developing Singapore into a culturally vibrant society. In addition, we have been exempting from duty cultural performances organized on a non-commercial basis. Finally, on corporate tax, Dr Augustine Tan has asked for an accounting on the cost benefits of the various incentives which we have been giving over the years. Without going into the details, I think the answer is all around us. The fact that we have such a large number of companies, first-class multi-nationals queuing up to invest in Singapore, with world class quality investments, is a testimony to the success of the scheme. They would not be here if they were not attracted to the scheme. And I can assure him the majority are not here to take advantage of our low wages nor to take advantage of the cheaper foreign workers. They are here because they see advantage in the facilities which Singapore provides in terms of transportation, communication, total business facilities, and the quality of the workforce. So detailed accounting may be possible, but I think it is unnecessary. The results speak for themselves. I now turn to individual income tax.”
“In addition, over $31 million were approved for some 150 SME automation projects last year under the Extended Automation Leasing Scheme. I believe that, contrary to popular belief and Dr Lee Siew-Choh's rantings, our SMEs are well looked after. Mr Chandra Das has suggested, however, that it might be useful to have a separate agency to look after the SME's interests. This is an interesting idea. I will refer it to my colleague, the Minister for Trade and Industry. The Member for Yio Chu Kang, Mr Lau Ping Sum, has asked that unit trusts be exempt from tax as in other countries, such as Hong Kong. I would like to point out to the Member that most financial centres do tax unit trusts. The major financial centres, such as the United States, the United Kingdom and Japan, impose a tax either at the unit trust level or in the unit holder's hands. In the US unit trusts are taxed at the unit holder's level while in the UK unit trusts are taxed like companies. In Japan, the tax is generally levied in the hands of the beneficiaries. The effective tax rate of 3.1% on unit trusts is already very generous compared to the tax treatment for other similar investment vehicles, such as investment holding companies. There is therefore little economic rationale for exempting unit trusts from tax altogether. The Member may wish to note that the tax measure itself has met with favourable response. Since July 1989, the number of domestic unit trusts has grown from 22 to the current 27, with another seven applications outstanding. Some Members have called on the Government to accord more importance to promoting culture and arts. Suggestions have been made to review the entertainment duty and to introduce tax incentives to encourage the entertainment industry.”
“Taiwan and South Korea, for example, require depreciation over longer periods. We also allow liberal investment allowances of up to 50% of capital expenditure incurred for companies engaged in specific activities. The Member for Cheng San GRC, Mr Chandra Das, and some others have commented that the assistance to small and medium size enterprises or SMEs is inadequate. I would like to point out that the SMEs can and do enjoy all tax incentives applicable to MNCs. For example, investment allowances amounting to $31 million was granted to over 320 SME projects in 1989. In addition, pioneer status was awarded to eight SMEs and $9 million in double tax deduction credits were approved for 566 applications by SMEs in the same year. I believe what is more important to SMEs are cheap sources of financing and information on market opportunities overseas. In this respect, the EDB and the TDB have a host of incentives to help such SMEs. These include the Small Industry Finance Scheme, the Product Development Assistance Scheme, the Market Development Assistance Scheme and the Small Industries Technical Assistance Scheme. These schemes provide cheap loans or grants of up to 70% of eligible costs and are designed to help SMEs to establish new businesses, computerize, improve their management and business operations and to develop export markets. In 1989, grants amounting to over $20 million were given to about 8,600 SME projects under the various schemes administered by the Economic Development Board, the Trade Development Board or other Government agencies, such as the National Productivity Board. Loans amounting to $271 million were approved for over 1,300 projects under the Small Industry Finance Scheme.”
“The Member for Marine Parade GRC, Encik Othman bin Haron Eusofe, has asked that concessions be given to encourage companies to train their workers. I would like to inform the Member that there are already a large number of incentives to encourage worker training. For example, expenses incurred in the employee's vocational training and continuing general education are deductible against the employer's income. Furthermore, a tax deduction of up to $2,000 is available for individuals who take up relevant courses to improve their skills and knowledge. A number of non-tax incentives are also available. For example, the Skills Development Fund administers a number of schemes and provides grants of up to 70% for allowable costs related to worker training. The Member should also be aware that tax incentives may not be the best way to encourage firms to send their employees for training. This is because loss-making and smaller companies most in need of training for their managers, supervisors, technicians, would be the ones least likely to benefit from such incentives. Furthermore, the tax incentives transfer the onus of administrative control to the Inland Revenue Department (IRD). As IRD is in no position to judge training needs, widespread abuse might result. Tax revenue will then be forgone without much gain in incremental training. The Member for Marine Parade GRC has also asked for further concessions to encourage employers to invest in new machinery. Our existing incentives are in my view more than adequate. For example, we allow a one year accelerated depreciation for all automation equipment and a three-year accelerated depreciation for all other equipment with the exception of motor vehicles. This rate of depreciation is amongst the most generous in the world.”
“Over the last 30-40 years, the population which had suffered under these policies finally decided that they have had enough, and all these policies are now being discarded wholesale. They are policies which guarantee an iron rice bowl, massive transfers of wealth from the rich to the poor, a general levelling down to the lowest common denominator, the removal of all incentives to work hard and everyone becomes equally poor. Clearly, such policies are no longer relevant. I would suggest to Dr Lee that he should, although I understand his reluctance to do so since he has devoted so much of his life to advocating these policies, re-examine his fundamental approach to life. One of the few successful experiments in a social democratic system is, I think, in Singapore where through accommodation of socialist policies allied with market mechanisms we have arrived at what we have today. I think the fact that we are here discussing the subject is probably the best testimony of how we have succeeded. Mr Chiam is also concerned that we have not given much attention to the lower income groups. Our tax cuts always tend to favour the high income or the rich. I would like to say that he has overlooked one most important point, which is that the Government's method of helping the lower income groups is by giving them good jobs and good salaries, not hand-outs. We do not believe in a crutch mentality or crutch economy. Throughout the period of the PAP Government the policy has been to create jobs, to ensure that the jobs are well-paid and therefore giving the workers the dignity they should have, instead of hand-outs. On this note, I will now turn to deal with the separate subjects which I earlier mentioned. Firstly, corporate tax.”
“Mr Speaker, Sir, I am heartened by the warm response of many Members to my budget speech and the various congratulatory speeches made. However, I should point out that this congratulation is misdirected because it should really be to the people of Singapore. Without their contribution towards the economy, there will be no revenue and therefore no budget to speak of. Sir, the fact that we have a good budget in the forthcoming year really is a reflection of the achievements of the population at large. Although most Members have been congratulative, nevertheless, the Members of the Opposition have as usual sounded their sour note. I will deal with their broad comments first before I go on to specific replies to Members' comments. This afternoon I intend to deal with only six matters of general interest which concern Government's financial and budgetary policies, leaving other matters of detail to be taken up in the Committee of Supply for the specific Ministries. The six items of general interest include questions on corporate tax, individual income tax, off-budget operations, consumption tax, budget allocations and expenditure priorities, and statutory and Government charges. Before doing so, I would just like to take up the criticisms which have been levelled at the Government's budget by, firstly, Dr Lee Siew-Choh and again by Mr Chiam See Tong who believe that they cannot support the Government's budget because they say that it is a rich man's budget and the poor people of Singapore get nothing. In the case of Dr Lee, I suggest that he comes out of his cocoon and sheds his Rip van Winkle robes and looks at what is happening to the rest of the world. He is advocating that Singapore should pursue a policy practised widely in many countries in Eastern Europe.”
“Mr Speaker, Sir, I would like to point out that it is not accurate to refer to commodities broking firms as being unlicensed since under existing laws, there is no requirement for them to obtain a licence for conducting broking in commodity futures. However, they are properly registered with the Registry of Companies and Businesses. Members may recall that in the Second Reading of the Futures Trading Bill in March 1986, investors were advised that broking firms which offer facilities solely in commodity futures were not subject to the regulations of this legislation. Members of the public who trade with them would therefore have to accept the risk involved. Investors were advised to place their orders through members of the Singapore International Monetary Exchange Ltd (SIMEX) as their activities in commodity markets are closely monitored by the Exchange. As SIMEX members have to meet a high standard of conduct and financial requirements, the interest of investors who trade through them would be protected. Currently, there are 15 SIMEX members which offer services in broking commodity futures in addition to financial futures. ANNUAL BUDGET STATEMENT 12.38 pm Order read for Resumption of Debate on Question [2nd March, 1990], That Parliament approves the financial policy of the Government for the financial year 1st April, 1990 to 31st March, 1991.". - [Minister for Finance]. Question again proposed.”
“It is a splendid testimony of the ability of our people to adapt to changing economic circumstances. I have strong confidence in our being able to keep up the momentum of our progress. Provided we continue to watch our competitiveness closely, we shall within the next decade achieve developed country status. Mr Speaker, Sir, I beg to move. [Applause]”
“These non-price measures need time to work, but if they prove effective, there may be less need in future to rely so heavily on price to discourage smoking. There will therefore be no increase in the duty on tobacco and cigarettes this year. Duty on Petrol The duty on petrol was last revised in May last year as part of a package of measures to curb vehicle growth and to discourage the unnecessary use of cars. It is a tax on the usage of cars, and thus complements the controls on ownership, such as the quota system announced earlier this week. There will therefore be no change in the duty on petrol. CONCLUSION In conclusion, Mr Speaker, Sir, our economy is now growing robustly in all sectors. The 1985 recession is well behind us. We have moved into a new phase of economic development. We have had three very good years in a row. In the coming years, let us keep up the momentum of progress. Our objective is to strive for high growth for as long as it is sustainable. The fiscal measures proposed in this Budget reflect the growth strategies which the Government has adopted to achieve this. The tax incentives are aimed at promoting high value-added activities and offshore services, to exploit our advantageous location, excellent infrastructure, and first rate workers. At the same time, it is hoped that the procreation incentives will encourage earlier child bearing and alleviate our population problem. We can all be cheerful this year, about the good years we have had and the bright prospects for the coming year. Although there are uncertainties ahead, as there always will be, the general outlook for the future is encouraging. We have made a dramatic turnaround from the 1985 recession.”
“However, for non-HDB owner-occupied residential properties, a concessionary property tax rate of 4% of annual value will be levied. I have decided to extend the same concessionary property tax rate of 4% of annual value to HDB owner-occupied residential properties with effect from 1st July 1990. As in the case of all properties, the annual value of HDB residential properties will be updated from time to time to reflect prevailing market conditions. Stamp Duty on Transfer of HDB Flats The cost of buying and selling HDB properties was reduced from last year when I lowered the stamp duty on property transactions. This year, I intend to give a further concession for transfers of HDB flats within a family by remitting the stamp duty in excess of $10 payable on any instrument executed in respect of such transfers. To obtain this concession, the transfer must not be for the purpose of profit and at least one of the original lessees must remain a lessee. This concession will take effect from 1st April 1990 and will be administered by the HDB. The revenue loss arising from this concession is estimated to be $3 million a year. Mr Speaker, Sir, I will now touch on other taxes. Duty on Liquor Duties on liquors were last raised substantially in 1987. I do not propose to make any changes this year. Duty on Tobacco and Cigarettes The tax on cigarettes and tobacco has been increased annually since 1987 and has been effective in curbing the growth in consumption. In addition, other measures to discourage smoking have also been introduced, including the national anti-smoking campaign, the ban on advertising of tobacco products and the prohibition of smoking in air-conditioned public places where food is served.”
“Relief for Aged Parents and Handicapped Dependants Last year, in support of the Government's call to families to care for their aged and handicapped dependants, I increased both the aged parent relief and the handicapped dependant relief to $2,500. This year, to further encourage families to care for their aged and handicapped dependants, I have decided to increase both tax reliefs to $3,500. This will take effect from Year of Assessment 1991. Relief for the Foreign Maid Levy Last year, in announcing further increases in the foreign maid levy, the Minister for Labour also announced that tax relief for the levy would be given to married women to encourage them to continue working and raise families. I have decided to extend this relief to divorced women and widows with children. The relief will be a sum equal to twice the annual levy paid in respect of one foreign maid. It will be available from Year of Assessment 1991. Deduction for CPF Contributions of Self-employed Persons Self-employed persons who make voluntary contributions to CPF, including payments to Medisave, are currently allowed to deduct such contributions from their assessable incomes. The deduction is limited to 10% of the assessable income from self-employment, subject to a maximum of $7,200 per year. In order to encourage self-employed persons save more to provide for their own needs when they retire, I have decided to raise the limit for such deductions to 15% of the assessable income from self-employment, subject to a maximum of $10,800 per year. This will take effect from Year of Assessment 1991. Property Tax on HDB Residential Flats I announced last year that the property tax rate of 23% will be reduced to 16% of annual value with effect from 1st July 1990.”
“These delays are particularly pronounced for the higher educated. The second births for post-secondary and tertiary educated mothers, for instance, tend to occur after age 31. Survey findings have also shown that if a mother has the second child in her early thirties, it is less likely for her to have a third child. To correct these trends, the Government has decided to give a special tax rebate to encourage families to have their second child earlier. Families with their second child delivered before the mother reaches 31 years of age will receive a special tax rebate of $5,000. If the delivery is before age 30, the rebate will be increased to $10,000; if it is before 29, the rebate will be $15,000; and if it is before 28, the rebate will be $20,000. The rebate will be granted from Year of Assessment 1991 for the second child born on or after 1st January 1990. It can be used to set off against either or both of the parents' income tax liabilities but must be absorbed within a period of 7 years. The rebate for the second child, together with the existing rebates for the third and fourth child, will be allowed to be claimed consecutively. To allow more families to claim the full $20,000 tax rebates for the third and fourth child, I have decided to extend the 5-year period within which each of the rebates have to be absorbed to 7 years. This extension will also apply to the additional rebates, equivalent to 15% of the wife's earned income, granted in lieu of maternity leave, for the births of the third and fourth child. The cumulative period within which the three rebates can be claimed will be 21 years.”