Tony Tan Keng Yam
Singapore
“One of the problems which they have in Britain is that, up to recently, they have no means to stop people coming into Britain and preaching in their mosques messages of hate, jihad and violence. Here, MUIS monitors our mosques very carefully, what is being preached at Friday prayers.”
“Sir, I am not going to enter into a debate about whether the war in Iraq is justified or not. That is another issue. But I would say, Sir, that with all the measures which have been taken over the last three years since 9/11, including the war in Afghanistan, the war in Iraq, the arrest of the Al Qaeda leaders, the detention of the JI lea…”
“Sir, we are extending the CCTV coverage in our bus stations, MRT stations and other places in Singapore where people congregate. It is a part of life now. For example, at our MRT stations, all our CCTV cameras are those where the films are recorded and we can analyse them. Surveillance is one of the effective ways of deterring terrorism.”
“The Muslim community in the UK has contributed to the healing process and has worked hard with the other communities to strengthen the moderate voice of Islam.”
“I would say again, Sir, that what we should do is when you see something which is suspicious, if you see a bag which is left unattended, report to some authority. We will look into it. We have to. And I am glad that we are getting more reports today, be vigilant.”
“It could reach here. We have to live with it. We support the war in Iraq. We believe that it is good for us to join the coalition led by the US against terror. The fight against terror is worldwide. We cannot opt out by not taking part. We are in it. We must continue whatever the difficulties.”
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“RUBBER ASSOCIATION OF SINGAPORE (INCORPORATION) (AMENDMENT) BILL Order for Second Reading read. 6.28 pm”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." The purpose of this Bill is to give legislative effect to the estate duty concessions that were announced in the 1984 Budget Statement. Specifically, it seeks to give effect to the following estate duty reliefs in respect of persons dying on or after 1st April 1984: (1) The exemption limit for residential properties will be raised to $3 million irrespective of the number of such properties owned by the deceased. (2) There will only be two rates of duty. The first $10 million of the value of the estate chargeable to duty will be taxed at 5% and the remainder at 10%. This two-tier rate of duty replaces the existing complicated system of remission and taxation with tax rates ranging from 5% to 60%. (3) The maximum exemption given for assets other than those which qualify for exemption as residential properties but including Central Provident Fund (CPF) balances will be increased from $100,000 to $500,000. The full CPF balance continues to qualify for exemption. Clause 4 of the Bill makes a minor amendment to section 1OA(l)(h) of the Act to reflect the change in name of the Gold Exchange of Singapore to the Singapore International Monetary Exchange (SIMEX). The exemption will now apply to deposits and balances of non-residents with members of SIMEX in respect of transactions in gold, Yen, Deutschemark and Eurodollar interest rate. Sir, I beg to move. Question put, and agreed to. Bill accordingly read a Second time and committed to a Committee of the whole House. The House immediately resolved itself into a Committee on the Bill. - [Dr Tony Tan Keng Yam). Bill considered in Committee; reported without amendment; read a Third time and passed.”
“I thank the Member for pointing out that there is an anomaly in the drafting, and I shall arrange for the anomaly to be rectified. The question of what is meant by a "robot" has been carefully examined. It is difficult to have a precise definition. However, for administrative purposes, the Inland Revenue Department will accept any manipulator which can be programmed to perform various operations in a prescribed sequence without any human assistance as a robot which qualifies for the one-year write-off. There have been go identifiable records to show that depreciation allowance has been allowed to indus- trial robots. However, if there are claims for residual balance to be written off, the Inland Revenue Department will allow the balance to be written off in full. The Member mentioned that he will be writing to me separately on the apparent conflict on the amendment to section 21 relating to depreciation allowance for a new car registered as a business service passenger vehicle. I would welcome his comments and I assure him that they will be considered seriously. 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 Tony Tan Keng Yam). Bill considered in Committee; reported without amendment; read a Third time and passed. ESTATE DUTY (AMENDMENT) BILL Order for Second Reading read. 6.25 pm”
“Mr Speaker, Sir, I would like to thank the Member for Kuo Chuan for the care he has taken in going through the Bill and for his pertinent comments which give me the opportunity to clarify a number of points. First, the Member is correct in noting that the increases in the rate of CPF from 22% to 23% on 1st July 1983 and from 23% to 25% on 1st July 1984 have not yet been reflected in the Income Tax Act. However, I would like to assure the Member that the contributions by employers have been allowed appropriate deductions. A suitable amendment to the Income Tax Act is being finalized and will be included in the next Amendment Bill. On the question of foreign source income, I wish to inform the Member that the provisions of section 13(3) have never been applied to companies. This is apparent from the existing provision which gives the exemption to "any person who is in Singapore for some temporary purpose only and not with any intent to establish his residence therein and who has not actually resided in Singapore at one or more times for a period equal in the whole to six months in the Year of Assessment". As the term "person" in the Act includes a company, the proposed amendment is to make clear that section 13(3) applies only to individuals. The amendment was introduced merely to remove any misinterpretation. No change in policy is intended. With regard to accelerated depreciation allowance, it is not intended to deny such allowance to taxpayers who have incurred capital expenditure on plant and machinery which qualify for the allowance. Therefore, any purchase made during the basis period for Year of Assessment 1985 would qualify for the three-year write-off.”
“Guidance is to some extent available from the 1984 Budget Statement in the light of which I would suggest that since the"robot" when used in this context is not a term with a generally understood and familiar meaning in ordinary language, it would be appropriate for some guidance to its correct Interpretation to be included in the legislation. I should also point out, Sir, that in introducing these particular provisions in the Bill the draftsman has referred specifically to expenditure incurred "during or after the basis period for the year of assessment 1985" as opposed to expenditure incurred on or after 1st January 1984. He has not, however, included any provision along the lines of the existing section 19A(lB) to permit an immediate 100% write-off of unallowed balances brought forward from previous Years of Assessment. Sir, there are also some problems centred around section 6 of the Bill which provides that with effect from Year of Assessment 1985, the provisions of section 21 of the principal Act will no longer apply to the replacement of one motor-car by another motor-car unless the new motor-car is registered as a business service passenger vehicle for the purposes of the Road Traffic Act and the Rules made thereunder. The said amendment appears to be at odds with other provisions with apparently similar legislative intent already existing in the principal Act. On this, I could perhaps write to the Hon. Minister separately.”
“It would be open to the taxpayer to claim section 19 allowances in the normal way in respect of pre-1st January 1984 expenditure in his Year of Assessment 1985 tax computation. One would then expect the unallowed balance of expenditure to be dealt with under the section 19A allowance system for subsequent Years of Assessment. For this to happen, the taxpayer must make an election to that effect and in accordance with the present wording of clause 4(f) of the Bill, that election must be made before the end of Year of Assessment 1985. The problem, however, is that in the circumstances I have set out, the election would not be effective for Year of Assessment 1985 tax purposes but would rather take effect from Year of Assessment 1986. A substantial proportion of taxpayers may overlook this somewhat subtle point and defer making an election until the submission of the Year of Assessment 1986 tax return, by which time, any such election would no longer be valid. I venture to say that it is unlikely that the Hon. Minister intended any such complex hurdles to be placed in the path of taxpayers seeking to avail themselves of the more generous allowances now available. It may therefore be appropriate for a more generous time scale for this election to be embodied in the legislation. If not, there is a clear danger of penalizing inadvertently a large body of taxpayers who do not devote undue time or effort to the detailed scrutiny of complex and somewhat obscure income tax legislation. Industrial Robots Clause 4(d) of the Bill envisages an extension of the special 100% write-offs for specially favoured assets like "Robots". The Bill, however, does not provide any guidance as to what exactly is meant by a "robot".”
“In order not to penalize those who have already purchased their equipment, unclaimed residual allowances in respect of existing equipment are also to be allowed full set-off in three years. Clause 4 of the Bill contains proposals to amend section 19A of the Act in line with the Budget Statement. Clause 4(a), which is intended to take effect from Year of Assessment 1985 onwards, provides that section 19A allowances will be available in respect of plant and machinery expenditure of all businesses but only in relation to capital expenditure incurred on or after 1st January 1984. However, for the reasons I have referred to earlier, it will commonly be the case that taxpayers incurred capital expenditure during their basis periods for Year of Assessment 1985 but prior to 1st January 1984. Clause 4(f) provides for the section 19A system to be applied to existing assets to the extent that they have not been written off for tax purposes under section 19 system. However, a pre-condition for such expenditure to qualify for this treatment is that it must have attracted allowances under the section 19 system at some period in the past. Capital expenditure incurred by a taxpayer during his basis period for Year of Assessment but prior to the 1st January 1984 will not have attracted any section 19 allowances for any earlier period and therefore will not be covered by the wording of the proposed amendments. This would be at odds with the drafting of clause 4(d) which I must now turn to. Assuming that it was the Hon. Minister's intention to restrict the extension of section 19A allowances only to expenditure incurred on or after the 1st January 1984, there still remains a potential anomaly in the proposed amendment as presently drafted.”
“These provisions were introduced with effect from Year of Assessment 1984, but the amended section 19(1A) in introducing these provisions did not refer to any specific date on or after which the relevant expenditure should have been incurred but to expenditure incurred during or after the basis period for the Year of Assessment 1984. Further, section 19(1 B) as amended provides that any capital expenditure incurred in earlier periods on computer and office automation equipment assets should rank for 100% write-off in Year of Assessment 1984 to the extent that there remained a balance of expenditure not fully allowed in earlier periods. Under section 35 of the principal Act, the income assessable to tax for any Year of Assessment is normally the income of the preceding calendar year. In the case of a business, however, subsection 2 authorizes the Revenue to accept as the basis period for any particular Year of Assessment the accounting period of the taxpayer ending in the preceding calendar year. In practice, therefore, it is very common to find that the basis period, for example, Year of Assessment 1985, in relation to a company or other unincorporated business will not be the calendar year 1984 but the 12-month accounting period ending on date 31st March 1984. The 1984 Budget Statement announced a substantial extension of section 19A allowances to the previously unfavoured business sectors. Section III of the Budget Statement provides that with effect from Year of Assessment 1985 all new equipment would be allowed to claim an accelerated depreciation allowance of 33 1/3 % over three years. Effectively, this means that expenditure on all new equipment could be written off against taxable profits in the three years following the year of purchase.”
“Capital Allowances on Plant and Machinery Broadly, there are two separate and distinct codes for the granting of capital allowances in respect of expenditure incurred by a taxpayer on plant and machinery. They are the section 19 code and the section 19A code. Under section 19 of the principal Act, an initial allowance of 20% of the expenditure incurred during the taxpayer's basis period for the Year of Assessment concerned is allowed. Thereafter, annual allowances are granted over a number of years varying according to the nature of the plant or machinery asset concerned. Under section 19A of the principal Act, the full cost of the qualifying asset may be written off for tax purposes over three years, one-third of the cost in each year. Capital expenditure incurred in a particular basis period first ranks for allowances in the Year of Assessment relating to that basis period. As it now stands in the principal Act, section 19A restricts the range of plant and machinery assets eligible for section 19A allowances by reference to a variety of criteria set out in subsection (1) of the section. Certain specific categories of assets will qualify for section 19A allowances irrespective of the nature of the business of the taxpayer (favoured assets) or the plant and machinery assets of specific categories of taxpayers will qualify for section 19A allowances (favoured businesses). Certain categories of assets like computers and office automation equipment qualify for a 100% write-off in the Year of Assessment relating to the basis period in which the expenditure is incurred.”
“There would henceforth be no statutory protection from a charge to Singapore tax on a foreign source income received in Singapore by, say, a foreign company regardless of whether such a company had any connection with Singapore or whether the Income in question was in any way related to Singapore. The mere receipt of income into a bank account operated in Singapore, for example, an ACU account, would be sufficient to establish a liability to Singapore tax. So, a foreign company contem- plating the opening or operation of an ACU account in Singapore must clearly demonstrate that the funds remitted to its bank account in Singapore were from capital and not income sources; otherwise, it would be liable to Singapore tax on the whole of the money remitted irrespective of the fact that the company may have earned such income entirely outside Singapore with no connection with Singapore except the operation of its bank account. The principal Act, as it now stands, without the proposed amendment, provides a logical and administratively workable code. Income sourced in Singapore is to be taxed here, irrespective of the residence of the recipient. Income sourced outside of Singapore is to be taxed here if remitted here by a tax resident. Income of a non-resident from sources unconnected with Singapore are not to be taxed here, irrespective of whether or not that resident chooses to take advantage of Singapore's banking and financial facilities. I would suggest that the aforesaid implications of the proposed amendment are not intended. If so, section 13(3) of the principal Act should be left unamended.”
“It is anomalous that only a proportion of the current percentage of the current percentage of the Employer's CPF contribution should rank for income tax deduction. I am sure that this must be an oversight on the part of the legal draftsman. Foreign Source Income Section 10 of the principal Act is the primary charging section and subsection (1) thereof imposes a charge to tax on income accruing in or derived from Singapore and on income received in Singapore from outside Singapore in respect of a series of types of income more specifically enumerated in paragraphs (a) to (g) of that subsection. The charging section refers to the income of a "person" which term is defined by section 2 of the principal Act to include a company, body of persons and a Hindu joint family in addition to an individual. The scheme of the charging section is that all income sourced in Singapore is to be chargeable to Singapore tax irrespective of where the monies may be received, but that foreign source income should be subject to Singapore tax only if the monies are received in Singapore. Section 13(3) of the principal Act exempts from Singapore tax foreign source income received in Singapore by a "non-resident person". Clause 3(d) of this Bill proposes to delete entirely the existing section 13(3) and substitute therefor the following: There shall be exempt from tax for any year of assessment any income arising from sources outside Singapore and received by any individual who is not resident in Singapore in that year of assessment.' This amendment was envisaged In the Budget Statement. The question here is, if any change in policy is intended. Sir, the implications of the proposed amendment are far-reaching.”
“Selvadurai (Kuo Chuan): Mr Speaker, Sir, as the Explanatory Statement to this Bill states, this Bill seeks to implement the income tax changes announced in the 1980 Budget Statement and to make certain other amendments to the Income Tax Act. A closer consideration of certain provisions of this Bill as it stands reveals that their drafting may lead to unforeseen or anomalous results. I should like to draw attention to those anomalies relating to:- (1) the Central Provident Fund Contributions. (2) Foreign Source Income. (3) Accelerated Capital Allowances. (4) Industrial Robots. CPF Contributions There is currently a discrepancy between the rates of Employer's CPF contributions payable under the CPF Act and the corresponding sums ranking for deduction in the Employer's income tax computation. The Bill is silent on this point. Section 14(l)(e) of the principal Act governs the deductibility of the Employer's CPF contributions up to the various specified percentages of the relevant employee's remuneration. Proviso (i)(E) to section 14(l)(e) of the principal Act limits the level of allowable Employer's CPF contributions on or after 1st July, 1982, to a maximum of 22% of the relevant employee's remuneration. Other sub-paragraphs provide for lower percentage limits for earlier periods. It is clear that the said percentage limits and the dates of changes as set out in section 14 of the principal Act correspond precisely to the relevant percentages specified under the CPF Act for periods up to and including 1st July 1982. Since that date, however, the percentages specified under the CPF Act were increased from 22% to 23% on 1st July 1983 and from 23% to 25% on 1st July 1984.”
“Clause 6 amends section 21 of the Act to ensure that the maximum amount of depreciation allowances which can be claimed for a new car registered as a business service passenger vehicle does not exceed $35,000. It also disallows the balancing charge on the sale of an old car to be set off against the cost of a new car unless the new car is registered as a business service passenger vehicle. Clause 7, which amends section 23 of the Act, is a technical amendment to allow the carry forward of industrial -building allowance to a person who derives income from the letting-out of an industrial building or structure but does not carry on the business in respect of such letting. Section 24 of the Act allows a company to sell equipment to a related company at the written down value instead of at market value. By an election under this section, undue tax advantage can accrue to a seller and a buyer of machinery or plant which has been leased by the seller to the buyer before the sale. Clause 8 amends section 24 of the Act to deny related companies involved in a lease agreement from exploiting the tax advantage that may arise from such an election. In the case of life insurance companies, the gains or profits on which tax is payable is based on its investment income and the gains or profits realized on the sale of investment. The intention is not to discriminate between companies receiving premiums from outside Singapore and those receiving from within. Clause 9 amends section 26(3) of the Act to make clear that premiums received by the company from outside Singapore are taxable. Sir, I beg to move. Question proposed. Mr P.”
“With effect from Year of Assessment 1985, the personal income tax rates of an individual or Hindu joint family will be reduced, ranging from 8.4% to 13.5%. A tax rebate of 10% will be given on the tax payable in respect of the first $10,000 of chargeable income. Clauses 10 and 13 provide for this. The enhanced child relief is now increased to include the normal child relief plus 5%, 10% or 15% of annual earned income for the first, second and third qualifying child respectively. This is, however, subject to a maximum allowable deduction of $10,000 in respect of each of the three eligible children. The relief is also extended for married women who have successfully completed their secondary school education with at least five 'O' level passes or who possess equivalent or higher qualification. The concession takes effect from Year of Assessment 1985. Clauses 14 amends the Fifth Schedule to the Act to provide for this. I now move to the other amendments to the Act. The Act, as it stands, is unclear whether an individual who is in Singapore for any part of the day is considered to be in Singapore for one day, for purposes of determining whether that person is a resident or not. Clause 2 amends section 2 of the Act to remove this doubt. Presently, only sums withdrawn from CPF balances on retirement are exempt from tax. Clause 3 amends section 13(l)(j) of the Act to exempt from tax any sums, including interest, standing to the credit of an individual in any approved pension or provident fund or withdrawn whether before retirement for approved purposes or after retirement. Clause 3 also makes a drafting amendment to section 13(3) of the Act to make clear that the section applies only to individuals and not companies.”
“Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time.' The Income Tax (Amendment) Bill seeks to give legislative authority to the income tax concessions announced in the 1984 Budget Statement. Opportunity is also taken to include seven other amendments to the Act. Sir, it was announced in the 1984 Budget Statement that with effect from Year of Assessment 1985, the option of a three-year accelerated depreciation allowance will be extended to all now plant and equipment in all trades and businesses. Unclaimed residual allowances in respect of existing equipment will also be allowed full set-off in three years. Clauses 4 and 5 of the Bill provide for this. The present tax exemption scheme for offshore syndicated loans, first announced in my 1983 Budget Statement, will now be extended to cover other syndicated credit facilities made during the five years from 1st April 1983. Specifically, the tax exemption scheme will now include syndication of guarantees, performance bonds and certain underwriting facilities, such as the underwriting of bonds, floating rate notes and revolving underwriting facilities. Clauses 3 and 11 amend sections 13 and 43A of the Act to provide for this. In order to provide the financial futures market, the Singapore International Monetary Exchange (SIMEX) will be given exemption on its income derived from futures activities for five years. Income of corporate and individual members which arises from transactions with non-residents, Asian Currency Units and other SIMEX members will be taxed at the offshore concessionary rate of 10%. Clauses 3 and 12 make the necessary amendments to sections 13 and 43D of the Act.”
“The Board of the new Authority shall be responsible for submitting a report on the activities of the organization to the Minister every year. This report will be presented to Parliament. Clauses 14 to 19 contain provisions dealing with the Authority's financial matters and financial procedures to be adopted by the Authority. The final part of the Bill covering clauses 28 to 43 deals with miscellaneous provisions. Clause 40 of the Bill provides a police officer with powers to arrest without warrant if he has reasonable cause to believe that the person has contravened any provisions of this Act and he does not know or cannot ascertain that person's name or address or if that person fails or refuses to leave the airport premises after being requested to do so. This is necessary as the airport is a sensitive security area. Clause 41 allows the Authority to retain all fees and charges collected. Any operating surplus will then be used to finance future capital expenses so as to improve the level of airport and air traffic control services and hence upgrade existing facilities. These then are the major highlights of the Civil Aviation Authority of Singapore Bill, 1984. Sir, I beg to move. Question proposed.”
“Examples are Amsterdam Schiphol Airport, Frankfurt Airport, Paris Charles De Gaulle Airport, Tokyo Narita Airport, London Heathrow Airport and New York J.F. Kennedy Airport. The new statutory board will have to organize its operations effectively, ensuring that the fees charged are fair and reasonable and that the standard of the service is high. With good management and given the necessary flexibility in planning and organizing its operations, the new Civil Aviation Authority will be better able to contribute significantly to the continued development of Singapore as a major air junction and communications centre. Sir, the Bill before this House seeks to effect the conversion of the Department of Civil Aviation into a statutory board to be known as the Civil Aviation Authority of Singapore. The term "Civil Aviation" will be retained for the new organization. The term has been internationally accepted as one which covers all aspects of civil air transportation and it will best describe the functions and responsibilities of the new Authority. Sir, I shall now go through the key clauses in the Civil Aviation Authority of Singapore Bill, 1984. The functions and powers of the Authority are covered under clauses 6 to 10. The new Authority will continue to perform the functions of the former Department of Civil Aviation, which includes maintaining and managing the civil airport, providing air traffic control services, enforcing rules and regulations pertaining to air safety and representing and advising the Government on all matters relating to civil aviation. It will be fully responsible in meeting its financial obligations and will be allowed to prescribe all fees and charges for services and facilities provided by it.”
“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. CIVIL AVIATION AUTHORITY OF SINGAPORE BILL Order for Second Reading read. 5.40 pm The Acting Minister for Communications (Dr Yeo Ning Hong): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Sir, in Singapore today, the Department of Civil Aviation is responsible for developing Singapore into an international air gateway. It should therefore efficiently manage and operate the civil airports in Singapore and provide air traffic control services of the highest order for all flights which come under Singapore's control. Phase I of Changi Airport was completed and put into operation successfully in July 1981. Plans are now under way to construct the second passenger terminal building as part of Phase 11 development of Changi Airport. The second passenger terminal is scheduled to be completed in the late 1980's. When completed, Changi Airport will be able to handle up to 20 million passengers per year or 10,000 passengers during the peak hour. Changi Airport is a massive capital investment. The entire Phase I development of Changi Airport represents a total capital investment of $1.5 billion by Government and the private sector. Hence, we must ensure that Singapore will remain competitive in the international market for aviation traffic. It is therefore timely to convert the Department of Civil Aviation into a statutory board. Most of the better managed and large international airports in the world today are run as statutory bodies or commercial organizations. This allows them to respond quickly to rapid changes and technological improvements in the aviation industry.”
“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 authorized by the Supply Act, 1983. The additional sum has been scheduled as a Supplementary Main Estimate which has been considered and approved by the House as Command Paper No. 4 of 1984. 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, 1984 to 31st March, 1985. 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, 1984 to 31st March, 1985, and appear on page 17 of Command Paper No. 5 of 1984. 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”
“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. SUPPLY BILL Order for Second and Third Readings read. 5.34 pm”
“Mr Speaker, Sir, evidently the Member has not listened to my answer. If the University were to cut down trees every time the Prime Minister visits it, then the campus will resemble a desert. I can assure the Member that there are many trees left in the campus. SUPPLY AND SUPPLEMENTARY SUPPLY BILLS (Business Motion) Resolved, That, notwithstanding the Standing Orders, the second and third readings of the Supply Bill for the financial year 1st April, 1984 to 31st March, 1985 and the Supplementary Supply Bill for the financial year 1st April, 1983 to 31st March, 1984 may be proceeded with immediately on the conclusion of the proceedings on the Budget for the financial year 1st April, 1984 to 31st March, 1985. - [Dr Tony Tan Keng Yam). MAIN AND DEVELOPMENT ESTIMATES OF SINGAPORE FOR THE FINANCIAL YEAR 1ST APRIL, 1984 TO 31ST MARCH, 1985 Order read for consideration in Committee of Supply [1st Allotted Day). [Mr Speaker in the Chair] 2.45 pm”
“Mr Speaker, Sir, the National University of Singapore cuts down trees when they are old, brittle or unsightly. The NUS also plants new trees and shrubs when necessary. All this is part of a continuing process to upgrade and improve the environment and landscape of the campus grounds and not, as implied by the Member for Anson's question, a special effort to beautify the grounds for the Prime Minister's visit.”
“- or unable to find a job if he wants it. Our school leavers, our graduates from the Polytechnic and the University can find well-paid jobs, fulfilling, interesting jobs. We have made it possible for our people to support themselves and earn the money with which they can buy what they want and to spend as they like. The average monthly wage for Singapore workers was $925 in 1983, 26% higher than in 1981. And after adjusting for inflation, the average wage for Singapore workers increased by 11% in 1982 as against 1981 and a further 8% in 1983 as against 1982. Altogether a total increase of some 19% in real earnings in three years. I think this is surely something we can be proud of. This is a tangible result which Singaporeans can look forward to under the economic policies which we have pursued, not a brief extravaganza of mindless, irrational spending financed by borrowings from outside the country which must end in a severe hangover, with no prospect for recovery. Is this what the Member for Anson is advocating? I am convinced that surely in spite of his grand standing and his long speeches, he must know in his heart that he is wrong and we are right. Perhaps one day he will admit it. Much obliged, Mr Speaker, Sir. [Applause]. Question put, "That Parliament approves the financial policy of the Government for the financial year 1st April 1984 to 31st March 1985."”
“Young men and women coming out of schools without hope of a job, without any future to look forward to. Here I am not talking about undeveloped countries in Asia or Africa. I am talking about countries which are acknowledged to be more advanced than us, countries in Europe and America. What is the situation in Singapore? Our economic policies have enabled us to go through the recession without a single person being unemployed - Some hon. Members: Hear, hear!”
“If the Member brings up the same points, I shall bring up the same schedule again. If you look at the distribution of the statistics for personal income tax assessed for the year of assessment 1982, you can see straight-away how false his statements are. In the lowest chargeable income groups, i.e. from $1 to $5,000, there are altogether 334,569 taxpayers. They comprise 55% of the total number of taxpayers. The tax that they pay amounted to $34 million, less than 4% of the total tax collected. The average tax assessed was $101. At the other extreme, our biggest taxpayers, those with chargeable incomes above $100,000, there were only 5,800 of such taxpayers, less than 1% of the total number of taxpayers in 1982. Each of these taxpayers paid an average amount of tax of $55,569 which taken together total $322 million, over 37% of the tax collected in 1982. As I said, Mr Speaker, Sir, I can give similar statistics for the year of assessment 1981 but I think I will merely bore the House by producing more statistics and more facts. If the Member is determined to close his eyes and not see what is in front of him, then no one can help him. Mr Speaker, Sir, in conclusion, may I just say a few general words on the Government's economic policy. How has the Singapore worker benefited from the policies of the PAP Government? Not through hand-outs here and there which are designed to earn applause, make good material for election speeches, not through empty rhetoric about fairness and equity, equal shares for all. The last three years since 1981 have not been easy years. The last three years have seen the worst recession the world has ever known since the second world war. What has happened in the other countries? Look at their unemployment statistics.”
“The National Stadium continues to achieve a healthy annual operating surplus every year. In FY 83, for instance, the surplus stood at over $1 million. This surplus can be used to defray the interest payments and the loan repayments. Therefore, I think there is no justification to convert the loan for the National Stadium into a capital grant. Perhaps I should spend the last few minutes, Mr Speaker, Sir, in dealing with the comments of the Member for Anson. He has spoken a great deal but basically his message is still the same - that the policy of the Singapore Government is to take from the poor to give to the rich. It is the same refrain which he has spoken last year, the same refrain this year and therefore I shall distribute the same schedule (Cols. 885 - 886) again this year. [Copies distributed to Members.] schedule - STATISTICS OF PERSONAL INCOME TAX ASSESSED FOR YEAR OF ASSESSMENT 1982 (Cols. 885 - 886) Sir, it is not quite the same schedule. I have updated it with more relevant statistics. An hon. Member: You can bring out the same schedule again!”
“For example, the Skills Development Fund provides grants to employers in all sectors of the economy. And the amount of grants which are committed to any particular sector depends on how active that sector is in applying for grants and on the quality of the proposals for skills upgrading and for the upgrading of operations. Let me just quote a few statistics. As at 31st December last year, the trade and service sector received a total of $64 million in grants from the SDF. This was made up of $57 million in training grants, $5.2 million in interest grants and $1.8 million in development consultancy grants. These amounts accounted for 36% of the SDF's total commitments for training grants, 15% for interest grants and 34% for development consultancy grants. Members may be interested to know that the shares of the trade and service sector were larger than those of the manufacturing sector in respect of training grants. I would expect that the trade and service sector will continue to benefit from the SDF as it sets up permanent training centres by various associations. And I can assure Members that the SDF will continue to provide generous support for the setting up of such training centres and in addition will provide training grants for the programmes that are offered by these training centres. Mr Speaker, Sir, I am conscious of the fact that I have only nine minutes more. Perhaps let me just go on to one or two specific points. The Member for Telok Blangah brought up the point about the conversion of Sentosa Development Cor- poration's $100 million loan into a grant and whether the loan for the establishment of the National Stadium could be converted into a grant. The basic answer is that it is not the same case.”
“It is trying to stimulate more employers to undertake comprehensive training schemes rather than ad hoc training schemes. Where the company can put forward a training programme which will benefit all its employees on a long-term basis, then the SDF is prepared to fund this training programme in advance rather than on a piecemeal basis. The SDF will also support employer-sponsored training programmes even when this is not directly related to the job but where the programme will develop the potential of the staff and prepare them for advancement. The programmes also need not be initiated by the employer. The employee can initiate the programme but it must have the endorsement of the employer basically to ensure the economic relevance of the programme. The Member for Thomson has asked about the progress of our economic restructuring. It would take too long for me to give a full report today but perhaps I will just mention one or two statistics. With regard to the new investment commitments which we have attracted to Singapore for 1983, the value added per worker was $41,300 at 1972 prices as against $24,000 in 1979 which means an increase of some 72%. In terms of expected fixed assets per worker, the value in 1983 was $34,600 as against $18,000 in 1979, an increase of 92%. So I think this goes to show that our economic restructuring programme is keeping pace. Some Members have also brought up the point about the importance of our service sectors and the fact that we should pay greater attention to these service sectors in our present day economy. Here, I would say that the Government is making various attempts to enable all sectors in our economy to grow according to their ability and not to favour one sector against another.”
“Then again, in the area of conventions, the Singapore Tourist Promotion Board is aggressively marketing Singapore as a prime convention destination. In 1983, the number of convention-type events increased by over 50% and the Singapore Convention Bureau is aggressively bidding for bigger meetings from 1985 onwards when we will have proper convention facilities in Singapore, for example, in the Raffles City complex. Some of these conventions are, for example, the American Society of Travel Agents in 1986, the World Congress for Food Science and Technology in 1987, the 12th World Congress on Fertility and Sterility in 1986 and in 1985 the International Bar Association Business Law Meeting. Again, overseas promotion trips will be made in order to sell Singapore as a prime convention destination in the major markets of the United States, Australia, Europe and Asia. I would like to say a word regarding the comment from the Member for Geylang Serai on the importance of the development of our human resources. I cannot agree with him more. It has always been the policy of our Government to ensure that everyone is trained to his or her full potential. Unless our people are trained in the right skills, in the relevant skills, economic restructuring is not possible. In the last few years, therefore, we have made a great effort to revamp our educational and training institutions and expanded their operations to ensure that every Singaporean will possess the right skills in order to enable him to find a job in the type of economy which we are developing. This means that the training curriculum has to keep pace with the advancement of technology. And here the Skills Development Fund is trying to emphasize employer-based training.”
“HoWever, the Government can play a role in helping to build the infrastructure so that those of our citizens who have got the spirit of entrepreneurship can take advantage of it. Here, I am not as pessimistic as the Member for Jalan Kayu because several of our Singaporeans have struck out on their own and have become very successful. Notably, I must say that many of the graduates of the EDB training centres, after working for a short spell with the multinational companies, have started their own supporting companies and are doing very well indeed. We will continue to make available such incentives and support, such as the Product Development Assistance Scheme, the Skills Development Fund and the Small Industries Finance Scheme in order to make sure that where finance is needed, it will be made available to those of our citizens who would like to start their own companies. But beyond that we cannot force people to become entrepreneurs. I hope that there are enough Singaporeans here who still retain the urge to be rich. This is the best way to foster entrepreneurship in Singapore, The Member for Alexandra has commented on the drop in tourist arrivals and asked what the Singapore Tourist Promotion Board is doing about it. Well, many things. First of all, the Singapore Tourist Promotion Board has restructured its marketing strategies so as to target at those countries that have recovered or are recovering from the recession. It has also worked more closely with the private sector in order to refine its role of tourist promotion. It is exploring new markets, for example, the Scandinavian market and the Canadian market to boost tourist arrivals to Singapore.”
“I agree with the Member that one of the main problems faced by many working women lies in the area of adequate child-care. There may be a reason, on the surface, to consider some tax incentives to encourage companies to set up child-care facilities for their staff. But we have to be careful about this because the cost of looking after children, for child-care facilities is not cheap. We want to be sure that we are not incurring a greater economic cost in setting up the child-care facilities so as to enable the women to go to work and earn a wage which is somewhat similar to the actual cost which is incurred in looking after the children in the child-care facilities. So this has got to be worked out. I think that where the working mother does not earn much more than the cost which is incurred in having a child looked after in a childcare facility, then it is probably better that she remains at home to look after her children and bring them up properly. The Member for Jalan Kayu stressed the need to encourage the growth of entrepreneurship in Singapore. It is, of course, true that entrepreneurs are not in great supply in Singapore. However, this is not limited to Singapore. This is not unique to Singapore. Entrepreneurs are in short supply everywhere. The qualities which make a person an entrepreneur are somewhat difficult to define. But, of course, the results are easy to recognize. Why do people become entrepreneurs? The reason is simple. They want to make a lot of money. The main motivation which we have given them, the main spur, is to try and design the tax structure, the structure of personal income tax, estate duty, so as to enable them to make a lot of money and then pass it on to whoever they want.”
“I hope that the enhanced child relief will go a little way towards recognizing the contribution of those mothers who are educated and are working and still managed to bring up their children. But I think it would be too much to expect that the enhanced child relief is the magic answer to the Great Marriage Debate. I think the measure is worth trying and I hope that it may perhaps turn the balance for some women when they are considering whether or not to have a second or a third child. But to expect more than that is to deceive ourselves. Now, as regards the matters brought up by hon. Members, again it is somewhat difficult to draw a line between those matters which should be brought up in the debate on the Budget Statement and those which should be discussed in the context of the votes for the particular Ministries in the Committee of Supply. Nevertheless, I shall try to touch on as many matters as possible in the time that is left, and if I have left out some matters, well, this is the first day of the debate and there are seven days left. The Member for Serangoon Gardens has brought up the matter of enhanced contributions to the Central Provident Fund. He has said that nowhere in the Budget Statement is it mentioned whether we are thinking of increasing the CPF contributions and if so, whether this will cut into the take-home pay. I have not said much about the CPF nor whether we shall bring it up or down because that is really the prerogative of the Minister for Labour. However, I am sure that at the appropriate time he will make a proper assessment and make it in such a way that workers' take-home pay will not be decreased. The Member for Kebun Baru has suggested that we should give some tax incentives to encourage companies to set up child-care facilities.”
“They will be assured that when they die their dependants and their loved ones will be well looked after. Now, as might be expected, the proposal to improve the enhanced child relief brought forth a large number of views and comments from various Members, including the Member for Serangoon Gardens, the Member for Whampoa and the Member for Kuo Chuan. Some Members have praised the proposal. One or two felt that it was too little and too late. I also get the impression that some Members feel that the Government is a little bit confused and does not know what it wants: whether educated women should stay at home, have children, bring up their families, or go to work and contribute to the economy. The answer is, of course, we want both. And it will certainly not be disadvantageous if our proposals also highlight the value of education. Now, to extend the enhanced child relief to all working mothers would be to defeat our purpose of sending clear signals to our population. So we have got to steer a middle line. We cannot be so strict as to limit it to a very small group. We cannot be so generous so that it becomes another form of child relief. The Ministry of Finance together with the relevant authorities, the Ministry of Education and the PSC, will be drawing up guidelines to see what are the qualifications which would be equivalent to five 'O' levels. The guideline which I have given them is to steer between the two extremes: on the one hand, not to be so generous that every working mother gets the relief on the other hand, not to be so strict that only people with exactly five 'O' levels get the relief. Somewhere in between the two extremes should be acceptable.”
“In a way, Mr Speaker, Sir, the revision in the personal income tax rates throws light on one of the major strengths of economic management in Singapore, and that is, we are able to plan ahead four, five, six or ton years ahead. Then depending on circumstances, step by step, implement these measures until we reach our final destination. This, I believe, is responsible in a large pan for the success of our economic management. As for personal income tax rates, so also for estate duty. Many Members have brought up this subject again, including the Member for Chua Chu Kang. Now, in theory, estate duty is the fairest tax. When you die the State takes away everything. Everyone starts with a fresh slate. In practice, estate duty falls heaviest on the mid- dle income group. It is very easy not to pay estate duty. I will tell you how. All you have to do is incorporate a private limited company, distribute shares to your wife, children, your other beneficiaries but retain a sufficiently large minority share holding so as to enable you to control the disposition of your assets. Then you are safe. When you die the assets will remain with your family and those whom you wish to benefit rather than benefit the State. The trouble is that this avenue is most easily exploited by those who are wealthy and those who have the capacity to engage tax lawyers and accountants. For the middle income group, they are the people on whom estate duty falls the heaviest. I hope that the simplification of estate duty which I have introduced in this Budget this year will make it unnecessary, as I have said, for the vast majority of our taxpayers, particularly the middle income group, to worry about estate planning.”
“Mr Speaker, Sir, I would like, first of all, to thank all the hon. Members for their kind compliments on the Budget and for their valuable suggestions and comments in the Budget debate. I have about half an hour left in today's session, so I shall not be able to cover all the points that have been raised today. In preparing the Budget this year, I cast my mind back to 1983 on how the form of the 1984 Budget would have been if the apprehensions which we had early last year have come to pass. Contrary to what many people may think, Finance Ministers do not have a completely free hand in framing budgets. They are constrained by the circumstances of the previous year and what they might reasonably look forward to in the coming year. As I said in the Budget Statement, last year 1983 was a good year for Singapore. But 1983 is 1983. It is past history. We are now in 1984 and as the Americans say, "We are in a new ball game." The 1984 Budget, therefore, is a forward-looking budget. It seeks to prepare 'the ground for our further economic growth, for our further social growth in the coming decade. In the corporate sector, I have proposed a number of measures which are designed to reflect the present diversity of our economic activities and which I hope will lay the groundwork for our economy to build on in the rest of the Eighties. As regards personal taxation, the revision of personal income tax rates which I announced this year completes the process which was first initiated by the late Mr Hon Sui Sen in his 1978 Budget. My colleague, Mr Goh Chok Tong, advanced this process considerably in his 1980-81 Budget, and I am happy that economic circumstances this year have enabled me to finalize this phase of our tax policy.”
“The trick is to be able to read the weather signs correctly and proceed at a pace which will satisfy the natural aspirations of our people, but which will not result in a nasty crash. In the last three years we, together with the rest of the world, have had to embark on unchartered waters. New perils, protectionism, instability of the international banking system, volatile exchange rates have arisen. While navigating the day-to-day obstacles we have had to make sure that the process of restructuring in our economy is not halted. One consistent theme has recurred: the importance of manpower development, education, training and management-labour cooperation. While the slogans may be new, the theme merely reflects the self-evident truth that Singapore's only resource is her people. How well we utilize our manpower will determine how much progress we can make and how prosperous we will be in the future. The economic policies and tax changes which I have outlined today are designed to keep up the momentum of our progress. It will be too much to hope that no new problems lie ahead. Problems and dangers there must be but, provided we do not slacken in our efforts and we work together, we will surmount them. Mr Speaker, Sir, I beg to move.”
“Duties on Liquors Excise duties on beer, stout and samsoo have not been raised since 1975. Import duties on beer and samsoo were last raised in 1977 and import duty on stout in 1980. With effect from today the excise duties on beer and stout will be increased by $6 to $22 per decalitre while the excise duty for samsoo will be raised from $75 per proof decalitre to $100 per proof decalitre. Import duty on beer and stout will also be raised by $6 per decalitre to $33 per decalitre and $45 per decalitre respectively, while import duty on samsoo will be raised by $25 per proof decalitre to $155 per proof decalitre. Details of the revision in import and excise duties on beer, stout and samsoo are listed out in Appendix III. (Cols. 473 - 474). Appendix III - DUTIES ON LIQUORS (Cols. 473 - 474) The revision in duties is expected to yield an additional $38 million. Duties on Motor Cars I would like to say a word about duties on motor cars. Members will know that one of Government's objectives is to restrain the growth of the motor car population in Singapore in order to contain the problem of congestion on our roads. I had considered increasing registration fees and road tax in this Budget but eventually decided not to do so in view of the substantial increases announced in October last year. I hope, however, that the decrease in personal income tax rates, which I announced earlier, will not lead to an upsurge in purchases of motor cars. Should this happen, Government will have to review the situation and make adjustments accordingly. CONCLUSION Mr Speaker, Sir, steering the economy of a nation is a delicate exercise. Holding the brakes full on means there is no progress. On the other hand if you press the accelerator too hard you may end up in the gutter.”
“Our overall tax philosophy has been to shift the burden of taxation from personal income tax to tax on consumption particularly on those items which cannot be regarded as comprising the necessities of life. In line with this philosophy I intend to increase the duties on bets, cigarettes, tobacco, beer, stout and samsoo. Duty on Bets The present duty on bets is 15% on the amount of bets placed on any totalisator or pari-mutuel promoted by any racing club or association. The duty was last revised on 1 April 1981. It will be further increased to 20% with effect from 1 April 1984. The additional revenue yield is estimated at $26 million. Duties on Cigarettes and Tobacco Duties on cigarettes and tobacco were raised last year in pursuit of our objective to discourage smoking particularly among our younger population. Consumption was dampened for a few months but quickly picked up and in December last year, consumption of cigarettes and tobacco reached an all-time high. However, we must persevere in this noble cause and not give up. This year I propose to raise the import duty on cigarettes, cigars, cheroots, cigarillos and other tobacco products, which are now at varying rates, to a uniform $60 per kilogram. The excise duty on cigarettes will be increased from $14 per kilogram to $24 per kilogram. Excise duty on cigarettes is payable in addition to the duty of $36 per kilogram on imported leaf tobacco which is used for the manufacture of cigarettes. Excise duty on other tobacco products will be fixed at $60 per kilogram. Details of the revision are set out in Appendix II (Cols. 471 - 472). Appendix II - DUTIES ON CIGARETTES AND TOBACCO (Cols. 471 - 472) The revision in duties will take effect from today and the yield in revenue is estimated at $43 million.”
“In my reply I stated that I was not convinced that there was a case to extend the enhanced child relief to all working women but there might be merit in the suggestion to widen slightly the present narrow range of qualifications which would entitle married working women to claim the enhanced child relief. I have considered the matter further and have now come to the conclusion that a somewhat more liberal scheme can be justified not only to induce our better educated married women to continue to work but, more important, to encourage them, hopefully, to have a second, if not a third child. This will go a little way towards correcting the present lop-sided pattern of procreation in Singapore which is a cause for concern. I have therefore decided that, with effect from Year of Assessment 1985, the enhanced child relief will be increased to the following amounts: For the first Normal child relief plus qualifying 5% of annual earned in- child come or $10,000 which- ever is less. For the second Normal child relief plus qualifying 10% .of annual earned in- child come or $10,000 which- ever is less. For the third Normal child relief plus qualifying 15% of annual earned in- child come or $10,000 which- ever is less. Furthermore the enhanced child relief will be extended to all married women who have successfully completed their secondary school education with at least five "O" level passes or who possess equivalent or higher qualifications. This will cover about one-third of our female working force. The loss to revenue is estimated to be $2 million. TAX INCREASES Finally, I move on to the tax increases.”
“Third, the full Central Provident Fund (CPF) balance of the deceased will continue to qualify for exemption. Where the CPF balance exceeds $500,000, no further exemption will be given for other assets except for those which qualify for exemption as residential properties. Where the CPF balance does not exceed $500,000, the maximum exemption that will be given for other assets including CPF balance will be $500,000. The period governing inter vivos gifts will remain at five years. Gifts made within five years preceding the date of death will be liable for estate duty. With these revisions in the structure of estate duty, it should be unnecessary for the vast majority of our taxpayers to worry at all about estate planning to minimise estate duty liabilities. The above concessions will take effect from 1 April 1984. The revenue loss will depend on the number and value of estates that will be assessed and for FY 1984 it is estimated to be in the order of $22 million. Enhanced Child Relief Last year I increased the enhanced child relief for specially qualified married women to be the normal child relief plus 5% of the woman's annual earned income for each of the first three eligible children. This provoked a lively debate among Members. Some felt that the relief was "peanuts" and unlikely to persuade highly qualified married women to continue to work and give society the benefit of their talents and abilities. Others suggested that the relief should be extended to all working women or, at the very least, to those categories of married working women who have some form of tertiary training and education although this might not be at the University level.”
“The rates of tax for the first three chargeable income groups, that is, up to chargeable income of $10,000 are, in my view, already low enough and will not, therefore, be changed. Instead, I intend to give a flat rebate of 10% on the tax payable in respect of the first $10,000 of chargeable income for Year of Assessment 1985 and future years. The revenue loss as a result of the reduction in tax rates is estimated at $89 million. Estate Duty In the Budget Debate last year some Members pointed out that the present structure of Estate Duty is not consistent with Government's philosophy of encouraging people to work hard and save. With the Government taking away a big chunk of what the taxpayer has worked so hard in his lifetime to accumulate, the Members felt that it would be more sensible for the taxpayer to spend his income rather than ret the Government take it away when he dies. The present system of Estate Duty therefore encourages consumption and discourages saving. I informed Members then that the Ministry of Finance was in the process of reviewing the whole rationale of estate duty and I promised to let Members have more information this year. I am pleased to inform Members that the Ministry of Finance has completed its analysis and the structure of Estate Duty will be substantially simplified. First, there will only be two rates of duty. The first $10 million value of estate chargeable to duty will be taxed at 5% and all subsequent amounts at 10%. This two-tier rate of duty will replace the existing complicated system of remission and taxation with tax rates ranging from 5% to 60%. Second, the exemption limit for residential properties will be revised to $3 million irrespective of the number of residential houses which the deceased owned.”
“Second, the tax base should be as wide as practicable in order to drive home the message that the cost of services provided by the Government has to be borne by all citizens. The more citizens we have paying tax, even if it is a nominal amount, the more widespread will be the realization that welfare giveaways ultimately carry a price tag. The third principle is to ensure that inflation does not push income earners into higher tax brackets. Personal Income Tax rates should therefore be revised periodically to correct for inflation "creep". Rates of personal income tax have been reduced three times since 1978. As a result, the share of personal income tax collections as a proportion of total income tax collections has declined from 34% in 1977 to 23% in 1982. The last reduction in personal income tax rates took effect in Year of Assessment 1982. For the Year of Assessment 1984, I have decided to give a rebate of 10% on the tax payable. The rebate of 10% will more than mitigate the erosion of real incomes by inflation which, according to the Consumer Price Index, rose by 5% between 1981 and 1983. For Year of Assessment 1985, the existing rates of personal tax will be reduced. With your permission, Sir, I would like to table a schedule (Appendix I) (Cols. 469 - 470) which shows the revised income tax rates. Appendix I - INDIVIDUAL INCOME TAX REDUCTION UNDER REVISED RATES SCHEDULE FROM YEAR OF ASSESSMENT 1985 (Cols. 469 - 470) In the revision of tax rates, I have paid special attention to the middle income groups whose chargeable incomes fall within $10,000 to $100,000. They will enjoy average reductions in income tax ranging from 11.9% to 13.5%. The highest marginal rate has been reduced from 45% to 40% giving reductions of between 8.4% and 9.8% for our biggest taxpayers.”
“The Singapore International Monetary Exchange ("SIMEX") will be given a five-year tax exemption on its income derived from futures activities. Income of corporate members which arises from transactions with non-residents, Asian Currency Units and other SIMEX members will be taxed at the offshore concessionary rate of 10%. Individual members of SIMEX will also be able to enjoy this concessionary tax rate. Since futures transactions will be essentially foreign currency transactions, this concession is in line with those given to promote the offshore gold and Asian Dollar Markets. Income arising from transactions with residents will be taxed at 40%. Market users will be taxed according to the normal tax laws. The tax treatment will vary, depending on the nature and circumstance of each transaction. TAX CHANGES FOR INDIVIDUALS I will now consider the tax changes for individuals. Budget speeches in recent years, including this year, have repeatedly stressed the need to reward individual enterprise and hard work. When individuals succeed, they benefit not only themselves but also society. People must be given the motivation to want to work hard, to better themselves, to invest in new ventures, to take calculated risks. In this Budget I propose to provide the motivation through two major changes: (a) Reduction in Personal Income Tax rates, and (b) Simplification of Estate Duty. In addition, the scheme for Enhanced Child Relief will be improved. Personal Income Tax Rates Our philosophy on Personal Income Tax rests on three basic principles. First, personal income tax should never be so high as to become a disincentive to work and enterprise.”
“The investment allowance of 50% will be granted to the investing company only if the new project does not make any cumulative profit during the three-year period commencing from the expected date of production. This incentive should encourage our local investors to venture into new frontiers of technological advancement and serve to broaden our present technological base. Extension of Offshore Syndicated Loan Tax Exemption I have also indicated the Government's intention to extend the present tax exemption scheme for offshore syndicated loans to cover other syndicated credit facilities. Specifically, the tax exemption scheme will now include the syndication of guarantees, performance bonds and certain underwriting facilities, such as underwriting of bonds, floating rate notes and revolving underwriting facilities. All income earned from the syndication of such facilities will be exempt. In the case of underwriting, the tax exemption will not cover income earned by the underwriter arising from the holding of part of an issue that has not been fully subscribed. In keeping with the scheme for offshore syndicated loans, the tax exemption will be granted to credit facilities which meet certain criteria and are syndicated in Singapore during the five years from 1 April 1983. The criteria are essentially simi lar to those we have at present for offshore syndicated loans. Both schemes can also be extended by the Minister for Finance beyond 31 March 1988. Tax Incentive for Financial Futures Market The financial futures market will come into operation in June. As this is a new area of financial activity, I have decided to give tax incentives to help the futures market get off to a successful start.”
“I wish to emphasize that all firms should take the necessary steps to automate and upgrade their operations, regardless of whether they are manufacturing or non-manufacturing concerns. I propose therefore to extend the three-year accelerated depreciation allowance to all plant and equipment in all sectors. With effect from Year of Assessment 1985, all new equipment will be allowed to claim an accelerated depreciation allowance of 33 1/3% over three years. Effectively, it means that expenditure oh all new equipment can be written off against taxable profits in the three years following the year of purchase. In order not to penalize those who have already purchased their equipment, unclaimed residual allowances in respect of existing equipment will also be allowed full set-off in three years. To be consistent with our policy to restrain growth in the number of passenger vehicles, these concessions will not be given to motor cars, motor cycles and light goods vehicles. Computers and office automation equipment will continue enjoying the 100% depreciation in the first year. Investment Allowance for Local Companies to Invest in New Technology Projects As I mentioned earlier, local companies which invest in approved venture capital projects in new technology industries will be able to write off up to 50% of the equity invested in such projects if the projects incur losses. This will take the form of an investment allowance of up to 50% of the equity investment by those companies which undertake projects approved by the Economic Development Board. A company is defined to be a local company if the majority (ie more than 50%) of its equity is owned by Singapore citizens or Permanent Residents.”
“Section III Revenue With existing tax rates, recurrent revenue for FY 84 is estimated at $9,969 million. This represents a decrease of $552 million or 5.2%, compared with the revised estimates of $10,521 million for FY 83. Income Tax will continue to be the largest single source of revenue, accounting for about 33% of total revenue. Income tax collections for FY 84 are expected to amount to $3,300 million, which is $169 million or 4.9% less than FY 83 collections. The main reason for this decline is the economic slow down which continued into the first half of 1983. This will adversely affect corporate tax revenue collection especially from the oil refining, ship repairing, shipbuilding, hotel, manufacturing and commercial sectors. The total budgeted expenditure for FY 84 is $16,561 million, comprising recurrent expenditure of $7,567 million and development expenditure of $8,994 million. Even after taking into account the Development Fund income of $2,670 million, the total revenue of $12,639 million will be insufficient to finance total recurrent and development expenditure. There is a deficit of $3,922 million which will be financed by public borrowings and a drawing down from the Development Fund. TAX CHANGES FOR COMPANIES I now move on to the tax changes. In the first pan of my Budget Statement, I mentioned four tax changes which are designed to stimulate the corporate sector and promote greater efficiency and productivity in our economic activities. I will now elaborate on these changes. Accelerated Depreciation Allowance Manufacturing enterprises are presently allowed to write off their plant and machinery over three years. Non-manufacturing enterprises are, however, precluded.”
“The recurrent expenditure will be fully met by the anticipated revenue of $9,969 million, leaving a surplus of $2,403 million for transfer to the Development Fund to help finance development projects. Total development outlay for FY 84 is estimated to be $8,994 million or 54% of the net total budget. The provision is $1,205 million or 15% higher than the FY 83 figure. Allocations for public housing, infrastructural, industrial and commercial development as well as education and manpower training take up $7,809 million or nearly 87% of the development budget. About 45% or $4,000 million of the budgeted development expenditure is for the public housing construction programme. The allocation for infrastructural, industrial and commercial development is $3,178 million or 35% of the development outlay. Included in the provision is $2,019 million for new land reclamation projects and the development of industrial estates, mass rapid transit system and roads; $1,076 million to meet the requirements of Temasek Holdings, Petrochemical Corporation of Singapore, lines of credit to the Development Bank of Singapore and the Ship Financing Scheme; as well as $83 million for the Capital Assistance Scheme for the Construction Industry and the Economic Development Board's Capital Assistance and Product Development Assistance Schemes. The budget for education and manpower training is $630 million. This is for the school and junior college building programme, and expansion of the National University of Singapore, Nanyang Technological Institute, Singapore and Ngee Ann Polytechnics as well as vocational and industrial training institutes. A sum of $52 million is provided for the purchase of hardware and software development for the Civil Service Computerization Programme.”
“The growth in recurrent expenditure has been reduced to make more funds available for development projects. Nevertheless the allocation for recurrent expenditure should be adequate to cover the higher manpower and operating costs as well as the expansion of such services as education and manpower training. Expenditure on manpower will go up by $102 million or 6%. A total of 489 additional posts is provided for new or expanded areas of work. Of these, 209 are for the Neighbourhood Police Posts, Ang Mo Kio fire station and vital installations. The bulk of the remaining 280 posts is for the new Changi Airport fire station, Ang Mo Kio and Bedok branch libraries, Tuas incineration plant, Curriculum Development Institute of Singapore and clerical and other support services for new schools and junior colleges. Excluding the Armed Forces expenditure, Other Operating Expenditure is expected to drop by $21 million or 3% mainly because of lower agency fees to the Urban Redevelopment Authority for managing the sale of state lands on behalf of Government, transfer of major equipment purchases to the Development Estimates and a smaller allocation for the Fixed Rate Export Financing Scheme. There is an increase of $257 million or 24% in Grants, Subsidies and Other Transfers. This is due largely to higher manpower and operating costs of statutory boards and other institutions dependent on Government financing, a sum of $192 million to top up the Advance Accounts and an allocation of $50 million to augment the Contingencies Fund for recurrent expenditure. The increase of $76 million or 4% in the provision for Public Debt is due to a bigger allocation for interest payments as the volume of domestic loans has increased.”