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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“This will put Singapore more in line with other major financial centres like New York, which does not levy any stamp duty on stocks or share transactions, and Hong Kong, which does not impose contract note duty on transactions in foreign stocks or shares. It can also be seen as further Government encouragement and support of private sector initiative, which has led to a trading linkage being formed last year between the Stock Exchange of Singapore and the US National Association of Securities Dealers to facilitate the trading of US stocks here, and an agreement between our Stock Exchange and the Luxembourg Stock Exchange to have joint listings for Eurobonds. Stamp Duty for Assignment of Leases At present, the stamp duty on a lease agreement, other than an agreement for the lease of immovable property, is subject to a maximum of $500. However, when the interest in such a lease agreement is assigned to another party, stamp duty is levied on the transfer document on the basis of the value of the interest assigned, without any ceiling. I have decided to introduce a $500 ceiling on the stamp duty payable on such a transfer document with effect from 1st April 1988. This will bring it in line with the stamp duty on a lease agreement. The estimated loss of revenue is $100,000 a year. Import Duty on Refrigerators and Quota Restrictions on Airconditioners I now come to customs duties. We believe in and practise a policy of free and fair trade. As part of our commitment to even greater trade liberalisation, the Government has decided to remove the import duty on refrigerators, ranging from $184 per unit to $368 per unit, with effect from 1st April 1988. The revenue loss is estimated at $10 million a year.”
“Stamp Duty Exemption for Transactions in Non-Singapore Dollar Stocks or Shares In spite of the recent turbulence in stock markets globally, the capital market will continue to grow in importance as an alternative to the traditional bank loan as a source of funds for companies. To remain competitive as a financial centre for the region, we must establish quickly the depth and sophistication of Singapore's capital market. One of the more important ingredients of a successful capital market is an active and liquid secondary market for the trading of securities. In order to facilitate the development of a liquid securities market, an incentive scheme was introduced last year which extended the 10% concessionary tax rate to cover income from non-Singapore dollar securities transactions of Asian Currency Units (ACUs) and approved securities companies. This was aimed at encouraging international securities houses to base their operations here. This year, I intend to take one step further in this direction. Presently, stamp duty is levied at the rate of $1 for every $1,000 or part thereof on contract notes issued or received in Singapore for transactions in stocks or shares. To facilitate the trading of non-Singapore dollar stocks or shares here, I have decided to exempt, with immediate effect, the contract note duty on transactions in such stocks or shares by an ACU or approved securities company in the following situations: (a) when the transactions are with persons outside Singapore, or with other ACUs or approved securities companies; (b) when the transactions are on behalf of persons outside Singapore.”
“The income can be in the form of a royalty or incentive payment. Only individuals will be covered under the incentive. The applicant must be a Singapore citizen or permanent resident, and the originator or one of the originators of the invention. The activities covered under the incentive include the development of new products or processes, significant improvements on existing products or processes or significant design improvements. The design must be capable of industrial application and it must be capable of being patented or copyright protected. The incentive will take effect from YA88. It will be approved on a case-by-case basis and will be administered by the EDB. Extension of Tax Holiday for SIMEX The Government granted the Singapore International Monetary Exchange (SIMEX) a 5-year tax holiday when it was established in 1984. Since then, the performance of SIMEX has been encouraging. The average number of contracts traded in the Exchange has more than quadrupled from 1,500 in 1984 to more than 8,500 last year. Although SIMEX has progressed satisfactorily since its establishment, it will have to compete harder in the international market in view of the opening up of other foreign exchanges. The policy of SIMEX in building up its financial strength has enabled the Exchange to weather the crash in October 1987, without serious after-effects. In line with the Government's continuing support for the development of the Exchange, I have, therefore, decided to extend the tax holiday granted to SIMEX for another 5 years. This will allow the Exchange to build up its reserves, thereby increasing its attractiveness to international investors who wish to make use of its services. CHANGES IN DUTIES I now turn to stamp duties and customs duties.”
“The incentive provided for any loss incurred by an eligible investor from the sale of shares in or the liquidation of the approved venture project to be deducted against his statutory income. Approved overseas investment in new technology areas could qualify for this incentive. To encourage local companies to invest overseas, I have decided to introduce a new incentive for overseas investment which will allow a deduction of losses similar to that available under the incentive scheme for venture capital. Thus, losses from sale of shares in or liquidation of the approved overseas investment will be allowed as a deduction to the eligible investor. The incentive is targeted at overseas investments which provide signifi- cant economic spin-offs to the Singapore economy. These spin-offs should include one or more of the following: (1) allow access to overseas technology. These would include access to design and engineering facilities, equipment, engineering and scientific personnel, designs, patents or other specialised knowhow; (2) create high value-added engineering and technical employment; (3) provide access to overseas markets such that it would substantially increase the company's activities or extend its scope of operations in Singapore. Companies incorporated in Singapore which have invested or intend to invest overseas, are eligible to apply for the incentive. The incentive is effective from YA88. It will be administered by the EDB on a case-by-case basis. Tax Concession on Royalty Income for Product Design and Development In order to promote innovation, I have decided to extend the existing incentive which provides for 90% tax exemption on royalty income earned by authors and composers to income from approved inventions and product innovation.”
“Extension of Double Deduction of R & D Expenses to Services The EDB administers an incentive scheme where manufacturing companies may, on a case-by-case basis, deduct twice the approved research and development (R&D) expenses incurred in any R & D project. I have decided to extend the incentive to the following selected services with effect from YA88: (a) Computer software; (b) Information services; (c) Agrotechnological services; (d) Laboratory and testing services; (e) Medical research services. (f) Any other services or activities as may be prescribed by the Minister. The EDB will continue to administer the scheme on a case-by-case basis. Extension of Industrial Building Allowances to Services Industrial Building Allowances are currently available to companies engaged in manufacturing, certain warehousing and other selected activities. In the past, we have not extended them to the service sector largely because, unlike manufacturing industries, buildings used by such service activities have a tendency to appreciate in value. A general extension would, furthermore, lead to a substantial revenue loss. In order to help certain service industries develop in size and sophistication, I have decided to extend the allowance to approved companies in the following industries: (a) agrotechnology; (b) horticulture; (c) aquaculture; and (d) other approved services with specialised structures. Unlike commercial buildings, the specialised structures required for these selected industries have little or no alternative use. The extension is to be effective from YA88. Incentive for Overseas Investment An incentive for venture capital was announced in the 1986 Budget Statement.”
“From YA88 onwards, I propose to give the Comptroller of Income Tax the discretion to allow companies with substantial shareholding changes arising from legitimate purposes unconnected with tax considerations to deduct their trade losses. The losses will, however, be deducted only against income from the same business. This is to prevent companies from shifting profits to loss-making concerns taken over for the primary purpose of avoiding tax. Unilateral Tax Credits The 1985 Budget Statement provided for unilateral tax credit to be given to selected service income remitted to Singapore from certain non-DTA (Agreement for the Avoidance of Double Taxation) countries. The services covered include professional services, construction services, computer-related, technical and other consultancy services. We have recently been promoting the establishment of operational headquarters in Singapore. The unilateral tax credit scheme will be extended to foreign sourced income earned on approved operational headquarters activities which are presently not included in the specified list of services. This is to avoid double taxation of the foreign sourced income earned by these headquarters companies from countries which are at present covered by the scheme. The extension will be effective from YA88. TAX INCENTIVES I shall now describe the tax incentives for YA88. Service industries, particularly those requiring intellectual skills, are areas which we must promote if our economy is to continue to grow in the face of increasing competition and protectionism in export markets for manufactured goods. In line with our policy to develop the service sector, I have decided to extend a number of incentives under the Income Tax Act to services.”
“To resolve the issue of whether the gains derived by investment holding companies and unit trusts are subject to tax, I have decided that such companies may elect to have their profits from stocks or shares or other marketable securities taxed according to a schedule based on the length of time for which the shares or marketable securities have been held. This method of taxation will only apply to investment holding companies and unit trusts approved for this purpose. With your permission, Sir, I would like to table the schedule (Appendix I) (Cols. 647 -648) for Members' information. This alternative method of taxation will be effective from YA88. I hope it will lead to a more vibrant domestic fund management industry. Appendix I - TAX TREATMENT OF UNIT TRUSTS AND INVESTMENT HOLDING COMPANIES (Cols. 647 - 648) Deduction of Trade Losses by Companies The current legislation allows companies to deduct trade losses incurred in one year against profits in a subsequent year, only if there is no substantial change in their shareholders. Although this prevents loss companies from being traded as tax shelters, it has the unintended effect of affecting companies whose restructuring is beyond their control and unconnected with tax considerations. The cases I have in mind are changes in shareholding forced by nationalisation or privatisation of industries, and the changes in the shareholding of a company or its parent as a result of it being widely traded on recognised stock exchanges. Where substantial shareholding changes take place because of these reasons, the companies concerned should not be disqualified from deducting their trade losses.”
“Unless new taxes are introduced, tax incentives reduce the revenue available to finance public expenditure. In fact, tax incentives can be looked upon as tax expenditures. The effect of exempting or reducing tax for certain categories of taxpayers is the same as providing them with subsidies, except that these hidden subsidies circumvent the Government's budgeting process. Therefore, just as we are prudent in our expenditure, we are also careful and selective in giving tax incentives. With this note, I will now turn to the tax changes proposed for FY88. TAXATION There is no change in income tax. However, I will make a few technical changes and introduce a number of new incentives. CHANGES IN INCOME TAX Revision of Part B of the 2nd Schedule With effect from Year of Assessment 1988 (YA88), the highest effective rate of tax imposed under Part B of 2nd Schedule of the Income Tax Act shall be limited to 33%. This will help ensure that those who are taxed under the existing marginal Part B rates will not need to pay tax above the effective corporate tax rate of 33%. Tax Treatment of Unit Trusts and Investment Holding Companies When the Government started looking into the promotion of the investment management industry, one factor cited by the private sector as an obstacle to the development of the industry was the issue of whether profits from share transactions should be treated as trading income or capital gains. The Tax Exemption Scheme for Fund Management, introduced in 1983, effectively resolved this issue for non-resident investors. It relieved them of any Singapore tax liability on gains from disposal of investments acquired with funds managed by approved Singapore fund managers.”
“This tax structure, when combined with the tax allowance scheme, ensures that there is a fair distribution of the tax burden. Our personal tax rates are not onerous and are low compared to many other countries. By way of illustration, it is often not realised that a large number of taxpayers in Singapore with assessable incomes below S$150,000 per year, actually pay less personal income tax than their counterparts in Hongkong. There will be no need to introduce a broad-based consumption tax in the coming fiscal year. However, studies and preparatory work are continuing so that the administrative machinery will be available when a tax change becomes necessary. I shall now describe the Goverment's revenue position. The FY88 tax revenue is estimated at $5.7 billion, or about 6% higher than the revised FY87 collection of $5.4 billion. The expected increase is due to the good performance of the economy in 1987. The revised FY87 estimate for Consolidated Revenue stands at $9.8 billion. The projected Consolidated Revenue for FY88 is lower at $9.0 billion. This is because of a one-time transfer of $1.5 billion from the accumulated reserves of the statutory boards to the Consolidated Fund in FY87. The contributions from the statutory boards for FY88 are estimated at $120 million. The Government shall continue to pursue a policy of collecting adequate revenue to finance expenditure. On the expenditure side, Government programmes will be self-financing wherever possible. On the revenue side, we will constantly review and streamline our tax structure to ensure that we are internationally competitive and that our tax system does not discourage entrepreneurship. However, the private sector must not look upon tax incentives as the main source of Government support.”
“Each ministry and statutory board will be subject to a zero-base review by the Management Services Department and also to a comprehensive financial systems audit by the Auditor-General's Office at least once every five years. In addition, the Budget Division of my Ministry will review annually the cost-effectiveness of selected policies and programmes. The current performance measurement system used for budgeting will be revamped to provide a mechanism for top management in ministries and the central agencies to regularly monitor activities and take corrective action where necessary. Effectiveness, efficiency and workload indicators for major programmes will be published in the annual budget document so that Parliament and the general public will be better informed of the performance of ministries. SECTION III - REVENUE AND TAX CHANGES Mr Deputy Speaker, Sir, I now move to revenue and tax changes. We are constantly reviewing our corporate and personal tax structures vis-a-vis other countries. Our corporate tax rates are still attractive. We have tax treaties with a large number of countries and there are generous fiscal incentives for both the manufacturing and service industries. Taken as a whole, our corporate tax package remains competitive with the Group of Five nations and the other Newly Industrialising Countries. Therefore, for the coming year, there is no need for major changes in our corporate tax structure. Similarly, I see no need to adjust our personal income tax rates. We have a graduated personal tax scale which is designed to achieve as wide a tax base as possible and to provide adequate incentives for the industrious and the entrepreneurial. Tax rates begin at 3.5% at the lower end, rising to a maximum of 33% of assessable income at the top.”
“Up to 10% of the amount for development and subject to a maximum of $10 million each year could be committed by the Permanent Secretary in person without reference to the Ministry of Finance on projects each of which costs less than $500,000. All other development expenditure proposals would have to be submitted to the Ministry of Finance in the normal manner. With the implementation of the block vote allocation system, ministries will be delegated greater authority to manage their budget allocations. In particular, they will be granted authority to transfer funds and manpower between programmes. Changes to Government accounting procedures will also be implemented. A system of charges for inter-department services will be introduced. All ministries will be required to pay for services provided by central services departments such as the Public Works, Management Services and Central Supplies Departments. This will help ministries to be more cost-conscious and curb excessive demands on central services. Departments would be required to pay for state lands required for development projects and would be charged imputed rental for the use of Government buildings. This will ensure that the opportunity cost of using state lands and buildings is fully reflected. These changes represent a move from traditional Government cash accounting and towards a system that will better reflect the full cost of Government services and thus facilitate resource allocation decisions. To ensure that ministries put their allocated funds to best use and exercise their delegated authority properly, they will be subject to regular zero-base reviews and audits.”
“Economic development assistance to industries by the EDB will be stepped up. Such assistance is expected to more than double to reach $230 million in FY88. Apart from provision for direct outlays by ministries and grants to statutory boards, the FY88 Budget includes an allocation of $885 million for net lending to statutory boards. The bulk of this is for HDB's building programme and EDB's industrial loan scheme. The objectives of ensuring a balanced budget, reducing Government's share of national resources, and improving the cost-effectiveness of programmes will be facilitated by modifications to the existing Government budget allocation and control system. A new block vote budget allocation and control system will be used for the FY89 Budget. Under the new system, targets will be set for total expenditure by Government as a whole and for each ministry as a percen- tage of GDP. The expenditure to GDP targets would be determined taking account of national priorities and the need to balance the budget. Within the target total allocation for each ministry, the amount to be set aside for recurrent expenditure would be determined by assuming that the ministry's recurrent expenditure per capita in real terms is maintained at current levels. Increases in recurrent allocation would have to be justified in terms of higher demand for public services and inflation. Ministries would, however, be given complete discretion in deciding on the distribution of their recurrent expenditure allocation among programmes, activities and line-items of expenditure. Of the total allocation for each ministry, the balance after meeting recurrent expenditure needs could be used for development expenditure.”
“Grants-in-aid to meet the operating deficits of the tertiary and training institutions and other Government-funded statutory boards will amount to $851 million in FY88, an increase of $12 million. The relatively small increase is because provision made in the current year for a $50 million revolving fund for tuition loans to NUS and NTI students need not be repeated. With the completion of major development projects and the reduced scale of the public housing programme, development expenditure is expected to fall from $5.98 billion to $4.89 billion. Of the projected development outlay, direct development expenditure by ministries accounts for $2.23 billion or 46% and capital grants for the balance of $2.66 billion or 54%. Direct development expenditure by ministries is expected to fall from $3.22 billion in FY87 to $2.23 billion in FY88, a drop of 31%. The FY87 expenditure includes a "one-off" payment arising from the purchase the purchase by Government of the URA and JTC land banks. Other factors contributing to the lower expenditure in FY88 are the rescheduling of the road and expressway construction programme, and the completion of major drainage, sewerage and building projects. The direct development allocation includes a new $100 million provision for research and development by public sector organisations. Capital grants to statutory boards will amount to $2.66 billion in FY88, a decrease of $97 million or 4%. Of the total provision, $1.07 billion or 40% is a capital grant to the HDB to cover losses arising from sales of flats at subsidised prices. The MRTC requires a provision of $914 million. Another $134 million is earmarked for the expansion of facilities of vocational, industrial, training and tertiary education institutions.”
“Expenditure by the other ministries will increase by almost $230 million or 8%. A provision of $3.28 billion is set aside for the operating expenditure of the non-Defence ministries. Of this, $1.69 billion or 51% is for Expenditure on Manpower (EOM), $0.74 billion or 23% cent for Other Operating Expenditure (OOE) and $0.85 billion or 26% for Grants-in-Aid (GIA). Expenditure on Manpower is projected to increase by $98 million or 6% because of normal salary increments and the filling of essential vacancies. The moderate increase is due to the wage restraint policy and a reduction of nearly 2,052 posts from the authorised staff establishment. The reductions are possible following deletions of long-standing unfilled vacancies, implementation of mechanisation, automation and computerisation schemes, organisational reviews and changes in work procedures. The reductions are in line with the objective of reducing the public sector's share of the workforce. In my 1986 Budget Statement I mentioned that the manpower complement for existing functions and services would be reduced by 10% over a 5-year period. However, no limit was set on the staff increases allowed for new functions and services. Through redeployment and retraining of existing staff and greater capital investment, it should be feasible for ministries as a whole to achieve and maintain zero growth', in their actual staffing level. To ensure zero growth, recruitment will be regulated to match attrition. Other Operating Expenditure is projected to increase by $117 million or 19%. A significant portion of the increase is due to a $42 million provision under the Ministry of Law for agency fees to the URA for managing the sales of State land at Marina Centre.”
“In general, public services should be provided at least cost to the taxpayer. Expenditure in FY87 has been exceptionally high because of "one-off" debt servicing payments and the purchase by Government of the URA and JTC land banks. Both recurrent and development expenditures are projected to be significantly lower in FY88. Total spending in FY88 is projected to be $12.47 billion, about $2.80 billion or 18% lower than the revised FY87 expenditure. As a proportion of GDP, expenditure is projected to fall from 36% to 28%. Outlays per capita are expected to drop by 19%. Lower debt servicing costs and reduced development outlays consequential to the completion or near-completion of major development projects account for these drops. The authorised manpower complement of ministries and those statutory boards funded through the Budget will be reduced by nearly 2%. These broad trends are consistent with the long-term objectives of reducing Government's share of GDP and the workforce. Of the total expenditure allocation of $12.47 billion for FY88, $7.58 billion or about 60% is for recurrent expenditure and the balance of $4.89 billion or 40 per cent for development outlays. The projected recurrent expenditure of $7.58 billion is about $1.72 billion or 19% lower than the revised FY87 level. The drop is mainly due to lower debt servicing costs. Debt servicing will account for about 21% of recurrent spending in FY88, pensions payments for 3% and the balance of 76% is to meet operating costs of ministries. Pension payments are expected to rise by $51 million or 27% because of the larger number of retirees. Operating expenditure of ministries is projected to go up by nearly $480 million or 9%. Expenditure by MINDEF is expected to be about $250 million higher than in FY87.”
“The EDB has also promoted service projects that will generate an incremental $200 million in total business spending per year and $300 million in fixed asset investments in financial, information technology, distribution, medical, engineering and headquarters services. As the economy forges ahead, our comparative advantage in knowledge-based and skill-intensive service activities would be further exploited to evolve Singapore into a global city with a total business orientation. SECTION II - THE FY88 BUDGET Mr Deputy Speaker, Sir, I now turn to the FY88 Budget. The tax cuts and cost reduction measures introduced in 1985 and 1986 have enhanced our international competitiveness and stimulated economic growth. While the tax cuts have reduced Government revenue, a structural deficit has been avoided because of prudent expenditure policies. Recurrent expenditure increases have been kept to the minimum and development programmes which support economic recovery and longer-term economic growth implemented. Government's long-term budget policy objectives are three-fold: One, there must be an overall balanced budget. Over a 5-year planning period, recurrent and development outlays should not exceed the total revenue collection. Two, the share of national resources taken up by the public sector must be gradually reduced. This is necessary if the private sector is to spearhead future economic growth. Three, the effectiveness and efficiency of public services should be enhanced. Qualitative improvements in public services can be expected but these will come largely through higher productivity and better use of existing resources. As far as possible, programmes should be self-financing and subsidies kept to the minimum.”
“An important sector that should not be overlooked as we restructure our economy is the conglomerate of small local businesses. We need a strong dynamic base of local industries led by entrepreneurs willing to undertake risks and explore new market opportunities. With this objective in view, the Small and Medium Enterprise Division (SMED) of the EDB is spearheading the mission of nurturing and upgrading local companies. Various programmes ranging from the provision of financial assistance to the promotion of technology upgrading and the improvement of management methods have been launched. In addition, the SMED is formulating a Master Plan aimed at raising the productivity of small and medium enterprises, promoting innovative and entrepreneurial start-ups and developing promising local businesses. For the larger local companies, an effective way to develop would be to invest in relevant businesses in developed countries. This would result in a transfer of new technologies and increased overseas marketing channels to sell Singapore-designed and manufactured products. To pursue this strategy, the Government is prepared to give incentives to encourage companies to explore and venture into overseas investment opportunities. The Government also recognises the importance of the service sector. Apart from efforts to promote investment in manufacturing, the EDB has embarked on a programme to promote and develop the service sector by establishing a Services Promotion Division in 1986. Our strategic location provides an ideal place for Operational Headquarters (OHQs) to service and manage their subsidiaries and related companies from abroad. So far, a total of 13 OHQs have been successfully established.”
“Under such unfavourable circumstances, there is an urgent need to look for new markets, in Japan, in Europe and other countries. The Trade Development Board will continue to promote Singapore's exports by expanding existing markets and developing new ones. The Market Development Assistance Scheme (MDAS) has been an effective tool in encouraging our companies to export their products and services. So far, $6.13 million has been awarded to more than 500 companies under the MDAS. In 1987, a total of almost $4 million in Double Tax Deductions was granted to companies for their overseas promotion expenses. At the same time, in the electronics industry alone, there were 35 International Purchasing Offices (IPOs) in Singapore compared to only 22 in 1986. In addition to the promotion of exports of manufactured products, the TDB will also step up its drive to promote service exports. Many companies in construction and engineering services have so far benefited from TDB's promotional and assistance schemes in clinching contracts overseas. Besides these services, countertrade and other new forms of trading activities will also be actively promoted. As more international companies set up regional offices in Singapore, our position as a business and distribution centre will be further enhanced. Investments and Services As identified by the Economic Committee, we have to upgrade our industries to perform higher value-added activities if we are to maintain our industrial progress. It is encouraging to note that new investments committed during 1987 were moving increasingly beyond mere production into design, engineering, and research and development activities.”
“If left alone, it would widen rather than close the gap between the developed countries and us. We will then not be able to keep up with the rapidly changing skill requirements to meet technological changes. There already exists a mechanism in the Skills Development Fund (SDF), which can be used to address the problem of underinvestment in training. This can be done by liberalising SDF disbursements to support skills training of the workforce on a more extensive scale. We aim to increase training expenditure to 2% of payroll for training of all employees by 1989, and to 3% by 1992. To achieve this target, SDF disbursements will be increased substantially. For FY87, payments from SDF amounted to about $53 million. To support greater investments in training, this is expected to increase to $83 million by FY89 and $113 million by FY92. Over the next five years, the increased disbursements of the SDF will greatly exceed its annual collections of some $24 million and its interest income averaging some $10 million per annum. This will lead to a rapid rundown of the SDF's uncommitted reserves of about $300 million. Well before the SDF funds are depleted we will have to consider how best to increase the SDF levy in order to bridge the gap between collections and disbursements. International Trade The international trading environment has become increasingly protectionistic and will remain so during the year. As the US continues to be saddled with massive budget and trade deficits, the tide of protectionism is likely to swell. Recently, despite persistent protests, the US Government has announced its intention to remove Singapore from the GSP programme with effect from January 1989.”
“In my Budget Speech last year, I addressed the issue of long-term CPF target rates. We have since worked out and announced the long-term rates for CPF contributions which are necessary to sustain the Fund's objectives. As the present rates are below the desired long-term rates, we have to make gradual adjustments over a period of time to move towards the target CPF rates. Such adjustments should be made in times when the GDP growth is good and when the economy can sustain the increase without eroding our competitiveness. The Government will decide on any adjustments after the first quarter economic results are known. Upgrading the Workforce While striving to maintain our competitive position against a backdrop of global economic uncertainty, we must not lose sight of our long-term objective which is to reach the sort of mature economy characteristic of the developed nations by the 1990s. Our future lies in being plugged into the global network of investment flows, trade and communications. To do so successfully, our goods and services must be technologically of the same standard and quality as those in the developed countries. We have encouraged foreign investments into Singapore partly for the technology and the markets they bring with them. On our part, it is crucial that we equip our workforce with the skills and education to cope with new technologies and processes. Our ability to join the ranks of the mature and developed economies therefore depends critically on how well we upgrade our workforce. Yet, ironically, only about 1% of our national payroll is spent on training of workers compared to the 2 to 4% of payroll which advanced countries and MNCs spend on training. This problem of underinvestment in training is a serious one.”
“In 1986, we introduced the foreign workers levy as a market-related mechanism to regulate the demand for foreign labour. Such a levy is necessary in the light of differentials in the cost of employment between foreign and local labour. The rate of the levy has to be reviewed from time to time so that it reflects the social and economic costs of foreign labour. I will have more to say on this later in my speech. Wage Reform While the pool of foreign workers affords us some degree of flexibility in the short run over the size of our workforce, we also need flexibility in our wage system. This was amply demonstrated in our recovery from the last recession, which was due in no small measure to the sacrifice of our workers who took pay cuts and endured wage restraint to restore our competitiveness. This experience clearly underlines the need for a more flexible wage system which will make the process of adjusting wages both up and down more timely and effectively. I am therefore glad to note that progress has been made in wage reform. Among 891 companies being monitored, some 170 or 19% have already implemented flexible wage systems. To those who have yet to adopt a flexible wage system, I would urge them to do so quickly while the economic environment is favourable. Long-Term CPF Rates We made effective use of the CPF to recover from the last recession by reducing the rate of contributions. However, even if the CPF allows us some scope for adjustment of costs, we must not become over-reliant on it. The proper mechanism for adjustment should rightly be a flexible wage system. We view the CPF as a longer term savings scheme with its own specific objectives of providing for the basic needs of retirement income, home ownership and Medisave.”
“The Government is moving cautiously in adjusting the various concessionary rates and statutory charges granted in 1985 and 1986. These temporary concessions have, at some point, to be adjusted. They cannot become permanent by default. Some adjustments, for example, the removal of the JTC rental rebates, have already taken place. Other concessions, such athe property tax rebates, are still in place and will have to be adjusted in due course. Their impact on unit business costs is relatively small. Nevertheless, the Government will act circumspectly, and only withdraw them if the economic situation warrants it. The key to managing our economic growth is flexibility. This is the only way we can respond quickly and appropriately to changing circumstances. Flexibility is needed not just in Government policies and measures, but also in the other parts of the economy, especially the labour market. From the economic viewpoint, the task of managing our labour market centres around controlling the size of the labour force and introducing flexibility into our wage system. Foreign Workers Obviously little can be done in the short run to change the size of our local workforce. We have therefore been using a pool of foreign workers as a buffer to cope with business cycles and economic fluctuations. However, we must not lose sight of the social and economic costs of an increasing dependence on foreign workers. Faced with rapidly increasing demand over the short run, businessmen would naturally want to expand production quickly to seize the opportunity for growth. In such a situation, the demand for labour picks up rapidly. As the slack in unemployment has already been taken up since early 1987, there was a tremendous increase in the number of foreign workers.”
“Given the severity of the 1985 recession, our economic performance in 1987 has been very encouraging, with recovery achieved within a short period of two years. The creditable broad-based growth, strong domestic export performance, high level of investment and increasingly tight labour market in 1987, reflected the strength of the Singapore economy which was comparable to that prevailing in the pre-recession period of 1981-84. More important, based on various indicators compiled by the Ministry of Trade and Industry, Singapore has retained her competitiveness vis-a-vis the three Asian Newly Industrialising Countries. ECONOMIC PROSPECTS At the beginning of this year, we forecast a growth of between 5 and 6% for 1988 with the caveat that much will depend on how the major economies, particularly the US, react to the October stock market crash. As of now there are some indications of a possible slowdown in our economy. The US index of leading indicators, which has been shown to precede activity in our own manufacturing sector by six to nine months, has been on a downward trend. Similarly, the composite index of leading indicators developed by the Ministry of Trade and Industry has declined from September to November last year. Although the index improved slightly in December, the trend is downwards. The latest surveys of general business expectations in the manufacturing and service sectors of the economy showed an expected slowdown in growth in the next six months. Public Sector Rates and Charges The possibility of some slowdown in economic growth in the second half of the year cannot therefore be totally ruled out. Under such circumstances, we must monitor our cost competitiveness carefully.”
“Similarly, the supporting sectors like commerce, financial and business services also expanded by 11.1% and 10.1% respectively. The construction sector continued to be plagued by over-supply and contracted further by 11.7%. Overall, we achieved a better-than-expected growth of 8.8% in 1987. Disaggregating the sources of growth, more than half came from higher labour productivity. This was partly due to the strong recovery which resulted in workers and under-utilised machines being better utilised. Another third of the growth was through an increase in the indigenous labour force, helped to some extent by the absorption of retrenched workers. As an export-oriented economy, the robust expansion was fully reflected in the substantial increase in our external trade. In value terms, total non-oil domestic exports surged by 36%, while re-exports rose by 25% on the back of the recovery in the regional economies and the rise in commodity prices. The value of domestic oil exports, however, declined by 2%, with the rise in oil prices partly compensating for the 14% decline in the volume of oil exports. The strong improvement in our export competitiveness encouraged more new investments and expansion of operations by multi-national corporations (MNCs). Total investment commitments in 1987 grew by 21% to reach the target of $1.7 billion. The most active areas for investments were the electronics and supporting industries, largely due to the sustained growth in worldwide demand for both consumer and industrial electronic equipment. The broad-based economic expansion generated a total of 66,000 jobs in 1987, compared to the 11,100 jobs created in 1986. The unemployment rate which stood at 4.6% at the beginning of the year, fell steadily to 2.8% by the end of the year.”
“Since the beginning of 1987, the rise in employment and job security increasingly led to more confident consumer spending. Domestic demand was also boosted by the boom in the stock market - that is, untill October - and the recovery of the property market which led to a significant rise in wealth. The improvement in price competitiveness and promotional activities also resulted in rising tourist arrivals which further stimulated the commerce sector. Better corporate earnings, improved liquidity, growing optimism and more investments led to rising activity in the financial and business services sector. The sectoral performance throughout 1987 showed clearly the diffusion of growth momentum from the leading to the supporting sector, resulting in an across-the-board expansion in economic activity. Fortuitous external developments also played their part in fostering this broad-based expansion. After declining steadily throughout 1985, the electronics industry began to recover robustly in the second quarter of 1986. The strong improvement in our export competitiveness throughout 1985-87 resulted in the shifting of investment and production activities to Singapore. This improvement was also seen in certain other industries like ship-repairing, electronic products and tourism. The moderate recovery in commodity prices, particularly of palm oil, timber, petroleum and rubber, also helped to improve growth in the commerce, and financial and business services sectors. As a result of the broad-based expansion in 1987, all the major sectors except construction registered high growth rates. The leading sector, manufacturing, grew at a robust annual rate of 17%. As a result, transport and communications was able to maintain a strong growth rate of 8.7%.”
“Mr Deputy Speaker, Sir, I beg to move, That Parliament approves the financial policy of the Government for the financial year 1st April, 1988 to 31st March, 1989. SECTION I - REVIEW OF THE ECONOMY THE PATH TO ECONOMIC RECOVERY When I delivered the Budget Speech last year, it was on a note of caution. The economy was then beginning to pull itself out of its worst recession in two decades. It affected all sectors of the economy. Many companies were wound up and some 100,000 jobs were lost. The various cost-cutting and fiscal measures we implemented in 1985-86 did turn the economy around. But the recovery was uneven and weak. Manufacturing led the growth, benefiting significantly from the improvement in our international competitiveness. This spilled over to the transport and communications sector, which also was boosted by increased price competitiveness. Growth of the financial and business services sector was, at best, modest, with weak domestic demand for loans and sluggish regional economies. On the other hand, the commerce sector continued to shrink, largely because of less entrepot trade and weak regional growth. Construction also remained badly depressed. Thus, the economic recovery in 1986 was lopsided with some sectors rising creditably while others remained in the doldrums. The year 1987 saw the consolidation of our recovery. Strong international competitiveness, robust external demand and rising investments continued to sustain high growth in the manufacturing, and transport and communications sectors. Gradually, robust external demand led to a strong recovery in domestic demand in the supporting sectors. This was most evident in the commerce sector where domestic trade contributes about 54% of the total value added in the sector.”
“Resolved, That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 44) resolves that the Schedule to that Act be varied by deleting the figures "$418,500", "$1,441,510", "$331,100" and "$178,100" in the second column and substituting the figures "$424,300", "$1,481,400", "$301,500" and "$29,500", respectively.”
“Mr Speaker, Sir, I beg to move the motion* standing in my name under item 2 on the Order Paper. *The motion reads as follows: That this Parliament, pursuant to section 7 of the Civil List and Pension Act (Chapter 44) resolves that the Schedule to that Act be varied by deleting the figures "$418,500", "$1,441,510", "$331,100" and "$178,100" in the second column and substituting the figures "$424,300", "$1,481,400", "$301,500" and "$29,500", respectively. Sir, it is proposed to increase the provisions for the Privy Purse and Salaries of personal staff to $424,300 and $1,481,400 respectively. The increases are due to a contingency provision for the possible payment of the Special Bonus in FY 88. A sum of $301,500 is required to meet Expenses of the Istana household. This is a decrease of $29,600 and is due to lower expenditure on public utilities as well as reduced maintenance costs of furniture, equipment and motor vehicles. The allocation under Special Services is also reduced from $178,100 to $29,500. This is because a "one-off" provision made in the current financial year for the replacement of the President's car and a van is no longer required. It is, therefore, necessary to vary the provisions in the Schedule to the Civil List as follows: for "The Privy Purse" from $418,500 to $424,300; for "Salaries of personal staff" from $1,441,510 to $1,481,400; for "Expenses of household" from $331,100 to $301,500; and for "Special services" from $178,100 to $29,500. Sir, I beg to move, Question put, and agreed to.”
“Mr Speaker, 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. CIVIL LIST”
“Mr Speaker, Sir, I beg to report that the Committee of Supply have come to certain resolutions. Resolutions reported - "That the sum of $7,33l,970 shall be supplied to the Government under the Head of Expenditure for the public services shown in the First Supplementary Main Estimates of Expenditure for the financial year 1st April, 1987 to 31st March, 1988, contained in Paper Cmd. 3 of 1988." "That the sum of $124,480,000 shall be supplied to the Government under the Head of Expenditure for the public services shown in the First Supplementary Development Estimates of Expenditure for the financial year 1st April, 1987 to 31st March, 1988, contained in Paper Cmd. 4 of 1988."”
“Sir, I beg to move, In page 14, after line 2, to insert - "(c) by deleting the words "paragraph (6)" in paragraph (7) and substituting the words "paragraph (5)";". In page 14, after line 39, to insert - "(f) by deleting the words "paragraph (8)" wherever they appear in paragraphs (9) and (10)(b) and substituting in each case the words "paragraph (7)";". Sir, clause 19 of the Income Tax (Amendment) Bill needs to be amended in order to rectify an error in the renumbering of the provisions therein pertaining to amendments to the Fifth Schedule of the Income Tax Act. Amendments agreed to.”
“Mr Speaker, Sir, may I, with your permission, move my two amendments together?”
“My apologies, Sir, to the Member for Rochore. I overlooked this point. Present legislation provides that income earned overseas and not remitted to Singapore is not subject to tax and that still holds. 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. [Mr Speaker in the Chair] Clause 1 -”
“Furthermore, there are adequate safeguards provided under the amendment which are to be found in the judicial interpretations of legislations having similar wordings such as in New Zealand and Australia, for there is a considerable body of case law on which we can rely for the purpose of construing the proposed section 33. One of the principles which has emerged is that the provision will not apply to bona fide transactions even if these result in tax savings where such savings are incidental to the transactions. On the other hand, the provisions will apply to transactions where payment of tax is avoided through deliberate and artificial tax avoidance arrangements. It is the intention that the IRD will respond in writing publicly to the concerns expressed by the Big Eight accounting firms and their reply would be published for public guidance. And it is also the intention that the IRD will from time to time cite examples of the sort of cases which will be subject to this new amendment and also give examples of those cases which would not fall under the ambit of the present amendment. So the proposal by the Member for Rochore is accepted, in that we will from time to time use illustrations publicly announced to tell the public that certain types of transactions are obvious cases for application of the new section 33 and those which are not. I would like to assure Members of the House that it is not the Government's intention to hound businesses or to detract from the growth of Singapore as a commercial centre. Certainly this cannot be our objective. And if there should be obvious disadvantages emerging as a result of legislation, we can always look at the way it is applied in future.”
“The objective is to give the Comptroller powers which he does not have at the moment - to stop blatant tax avoidance schemes, the numbers of which have increased despite what the Member for Radin Mas has suggested that there have been hardly any cases in the last two decades. The reason that there have been no visible cases is because the Comptroller has never had powers to bring them into court and therefore he has not been able to charge anyone as he is without teeth at the moment. However, having said that, I think we have in the process of drafting this legislation studied the anti-avoidance provisions of a number of countries before we finalized our draft, including countries such as Hong Kong, Australia and New Zealand. Even Hong Kong has deemed it necessary to adopt similar provisions long before us. The problem faced by countries with a substantial international business community and by financial centres is similar in that schemes of tax avoidance are now becoming so sophisticated and complex that most of them go undetected. They include very subtle schemes of transfer pricing, multiple company transactions, all of which are so difficult to trace that we believe substantial amounts of revenue are lost. The fact that Hong Kong felt it necessary to introduce legislation is probably the best testimony to the need for such legislation. And I do not see that the legislation which was introduced in Hong Kong which, in its turn, evoked tremendous protest when it was under discussion, has caused any detraction in the attractiveness of Hong Kong as a commercial centre.”
“Mr Speaker, Sir, the majority of concerns expressed by the Members for Thomson, Radin Mas and Rochore relate to section 33. However, I will first dispose of one other point raised by the Member for Radin Mas, which relates to clause 10 on the rebate for the third child, why is it disallowed when the marriage breaks up? It is an administrative issue because when the marriage breaks up, there will be problems in ascertaining which parent will qualify for the relief. By the way, it may help to discourage the break-up of marriages. Coming back to section 33 and the various questions asked. I think these are legitimate questions which have been raised not only by Members in this House but by many others from the private sector. It is for this reason that the Bill which was first introduced on 9th November 1987 and was due for Second Reading on 30th November was then delayed for a further month until today in order to allow representations from members of the public who have expressed concern. This is the reason why but I do not think a Select Committee is necessary because there has been ample opportunity for representations. We have, received representations from tax consultants and the Big Eight accounting firms. MAS has consulted the Association of Banks, SIMEX and various other bodies. Generally, all have expressed similar concern over the seemingly very wide powers conferred on the Comptroller. I would first like to reassure Members and the public at large that it is not the intention of this new amendment to penalize legitimate commercial transactions nor, for that matter, legitimate tax planning proposals put up by companies. It is perfectly proper for a company to set up its accounts to reduce the incidence of taxes.”
“Clause 15 is another technical amendment to section 86 of the Act to ensure that tax assessed under any of the provisions of the Act is duly paid up within one month of a notice being issued. This section presently covers tax payable by ordinary taxpayers only. Tax payable under any other sections such as the concessionary 10% rate for ACU income is not covered. Sir, I beg to move. Question proposed.”
“It was not the Government's intention, however, to grant the concession to payments received in respect of any work published in any newspaper or periodical. Clause 3 amends section 10(9) of the Act to effect this restriction. Presently, it is not clear that the tax exemption granted in respect of withdrawals from approved pension or provident funds is applicable only to those withdrawals which satisfy the conditions relating to withdrawals under the CPF Act and any regulations made thereunder. Clause 4 amends section 13(1)(j) of the Act to make this clear. Under the existing law, the Comptroller of Income Tax may only transmit information to the Comptroller of Property Tax. Clause 2 amends section 6(8) of the Act to enable the Comptroller of Income Tax to also transmit information to the Chief Valuer or the Comissioner of Stamp Duties which may be required in the performance of their duties. Section 45A of the Act is amended by clause 13 to extend the provisions for withholding of tax to cover fees, commissions and other payments related to indebtedness and paid to non-residents. This is to rectify an oversight in past amendments when withholding was extended to cover section 12(7) but not on new items introduced into section 12(6). Clause 16 is a technical amendment to section 88(1) of the Act to provide for the normal collection and recovery methods for penalties. Clause 18 is a technical amendment to section 94(2A) of the Act to make it an offence if the precedent partners fail to comply with provisions on the filing of returns. Presently, penalties are imposed only on persons failing to submit returns. Precedent partners were inadvertently left out.”
“I believe the measures I have just enumerated would give businesses sufficient degree of certainty in respect of the new section 33. I would like to reiterate that the sole objective of the amendment is to curb the proliferation of blatant tax avoidance schemes in Singapore and is not intended to affect normal commercial transactions. Clause 9 inserts a new subsection (4) to section 42 of the Act to clarify that non-exempt dividends received by any institution, authority or persons specified in the First Schedule to the Act will be taxed at the corporate rate. Presently, there is doubt as to whether they should be taxed at the corporate rate or the rates specified in Part B of the Second Schedule to the Act. Under the existing legislation, tax deducted from dividend distributions is only allowed to be set-off against current year assessments. This has forced companies, under certain circumstances, to delay declaring dividends by up to one year. The existing legislation also allows tax deducted from dividend distributions to be retained by a company for set-off against its tax liability when the company is assessed to tax in the following year. This has resulted in the Comptroller having to give credit to shareholders before the assessment on the company is completed. With effect from 1st January 1987, tax deducted from dividend distributions will be allowed to be set-off against current and future year assessments. In addition, no credit will be given to shareholders until tax relating to that distribution has been paid to the Comptroller. Clauses 12, 14 and 17 amend the Act to provide for this. In 1983, Government granted a 10% tax concession on royalties or payments received by authors and composers in order to encourage creative talents and to help local publishers.”
“The existing section 33 is grossly inadequate to deal with these schemes. Most countries have taken steps to strengthen their legislation to combat tax avoidance. Even Hong Kong has far wider provisions than our proposed amendment. In assessing whether a particular scheme would fall under the ambit of section 33, the Inland Revenue Department would, among other things, look for the presence of artificiality, the interposing of various intermediaries or transactions to reduce or avoid tax and transfer pricing. It should be stressed that the aim is to reduce blatant or contrived tax avoidance arrangements and is not intended to affect normal commercial transactions. I would also like to clarify that companies and individuals granted tax exemptions and concessions under specific incentive schemes would not be affected by the new section 33. They will continue to enjoy the tax concessions. The Inland Revenue Department would be prepared to assist taxpayers wishing to consult them on specific transactions as to whether such transactions would fall within the ambit of the new section 33 provided details of the transactions are presented clearly to them. Additionally, I would like to suggest that financial institutions and other companies approach the Monetary Authority of Singapore and the Economic Development Board respectively for assistance in the event of any uncertainty. The MAS and EDB would assist companies in their consultation with the Inland Revenue Department to determine whether their proposed schemes or transactions fall within the ambit of the new section 33. If necessary, the matter would be referred to the Ministry of Finance where a decision will be taken after considering the substance of the transactions and the benefits they would bring to Singapore.”
“The new subsection will allow an individual who has paid money in accordance with the CPF Act to his or his parent's retirement account to claim a deduction of the amount of such payments or $6,000 whichever is the less. The fourth concession in the 1987 Budget Statement enables the following income earned by Asian Currency Units and securities companies to be taxed at a concessionary rate of 10%: a) Commission and fee income of approved securities companies from transacting in non-Singapore dollar securities on behalf of non-residents. b) Income derived from trading in non-Singapore dollar securities with non-residents, other than ACUs and other approved securities firms. Clause 11 repeals and re-enacts section 43A of the Act to allow for this. I now move to the other amendments. Clauses 5 and 6 amend the Act by inserting two new subsections to section 16 and amending section 18(1) of the Act respectively. It puts into effect the tourist incentive package relating to industrial building allowances announced earlier last year. Buildings or structures in approved tourist projects will now be allowed to claim an initial allowance of 20% and an annual allowance of 2%. Section 33 of the Act is repealed and re-enacted by clause 7 to clarify and define instances whereby a transaction will be deemed as factitious for tax purposes. It empowers the Comptroller to disregard and make adjustments to certain arrangements which are carried out for the purpose of tax avoidance and not principally for bona fide commercial reasons. The need to strengthen section 33 stems from the fact that tax avoidance schemes are getting increasingly complex and are becoming "tailor-made" to suit specific clients, thereby adding to this difficulty in identifying them.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The Income Tax (Amendment) Bill, 1988, gives legislative effect to four income tax concessions announced in the 1987 Budget Statement. Opportunity is also taken to include 11 other amendments to the Act. In my last Budget Statement, I announced an incentive package to encourage procreation. A special tax rebate to be utilized over five years and subject to a maximum of $20,000 was granted in respect of a third child born on or after 1st January 1987. The rebate may be used to set-off either or both the husband and wife's tax liabilities. A further rebate, equal to 15% of a working wife's earned income, to be set-off against her tax liability, is also granted. Clause 10 inserts a new section 42A to the Act to provide for this. The normal child relief for the third child was also raised to $750 and the enhanced child relief extended to a fourth child if the birth occurs on or after 1st January 1987. Eligibility for enhanced child relief is also lowered to three GCE 'O' level passes or equivalent, taken in one sitting. The Fifth Schedule to the Act is amended by clause 19 to provide for this. The second Budget concession allows an individual, who has incurred delivery and hospitalization charges in respect of a legitimate fourth child born to him on or after 1st January 1988, to claim a deduction against his earned income, subject to a maximum of $3,000. This is provided for by clause 8 which inserts a new paragraph (da) to section 39(2) of the Act. The third Budget concession to grant tax relief for those who wish to top-up the CPF for their parents is also effected by clause 8 which inserts a new subsection (4) to section 39 of the Act.”
“Mr Deputy Speaker, Sir, the Member for Potong Pasir has made a serious allegation against the Government about misleading the public regarding the powers of the Singapore Turf Club to dissolve itself. I would refer him to section 35(g) of the Societies Act which specifically authorizes the STC to dissolve itself without reference to the Registrar of Societies. ADJOURNMENT TO A DATE TO BE FIXED (Motion) Resolved, "That at its rising today, Parliament do stand adjourned to a dated to be fixed." - [Mr Wong Kan Seng]. ADJOURNMENT MOTION”
“Mr Deputy Speaker, Sir, I name the first sitting after 1st January, 1988 for the Second Reading of the Bill.”
“The objective of this Bill is to protect the public interests and not to go into legal arguments and semantics. The purpose is to ensure that the assets of the Club are not used for purposes outside the public interest and for the private benefit of a small number of members. 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. INCOME TAX (AMENDMENT) BILL Order for Second Reading read.”
“No, no, I am not misleading the public. I think you might be misleading yourself. The purpose of ---”
“No, it is not misleading because it is the intent that we are concerned about.”
“As I said, there is no specific provision within the constitution of the Club. But they have it within their power under the Societies Act to carry out such a dissolution although you can say that legally, at present, they do not have such power, but the risk exists.”
“The statement is correct in that the Articles of Association of the Club do not specifically exclude the possibility of the Club being dissolved and its assets distributed amongst the members. This risk of it happening and the Government not having the legislation to block it is a very serious risk which we are not prepared to take.”
“The Member has also said that the intent of the Bill is to sequester not only the current cash assets of the Club but also substantial land assets. Well, this is not true. The land does not belong to the Club. It is under lease from the Government and the entire area is zoned as "Green Belt" and therefore not suitable for commercial development. The Member for Bo Wen has expressed support, although he has said that he hopes that the money would not be transferred to the Consolidated Fund. That is not the intention and I would ensure that the Board understands this: that the use of funds accumulated by the Turf Club operations should be confined to its terms of reference as defined in the Bill. The Member for Kaki Bukit has asked whether the Bill will change the Government's attitude towards gambling. My response is no. It does not. It merely corrects a position which should have been corrected a long time ago. As for Singapore Pools, for the moment we have not considered placing the Singapore Pools under the Board but it is not a matter which need be excluded at this point of time. The Member for Moulmein has expressed support for the Bill but asked why it took the Government so long to come around to it. Well, it is an oversight admittedly and we are now in the process of correcting it.”