HUIXIAN

WHEN Second Finance Minister Tharman Shanmugaratnam rose to respond to what has been, overwhelmingly, complimentary reaction to his budget, he tackled first the $4billion question:

Defer the GST hike because you will have enough tax money from the IR's casinos instead?

'But all the tax money from all the casinos in Las Vegas would not give us the kind of revenue that could replace the GST hike,' said Mr Tharman.


Non-Constituency MP Sylvia Lim had, on Wednesday, cited an expected amount of $1.5 billion to $3.8 billion from the casino operations of the two upcoming IRs.


REPLY

Mr Tharman's reply: 'The two IRs would have to make some $15 billion to $38 billion to generate that kind of money.

'I don't know if she really believes this, but to put it in perspective for her, all the casinos in Las Vegas put together, they earn $10 billion a year in gaming revenues.

'So our $15 billion to $38 billion which she hopes we'll get from the two IR resorts will be 1.5 to 4 times the gaming revenues of the whole of Las Vegas.'

The Second Finance Minister also addressed the point by Potong Pasir MP Chiam See Tong about using the proceeds from land sales to stave off the GST hike.

He noted that the Government was already counting the sale of short leases as part of its operating revenue. Proceeds from long leases are put into the reserves, so that it earns income which the Government will then draw on.

Land sale proceeds tend to be volatile, he observed. Hong Kong, which relied on such revenues, has acknowledged that this was a 'narrow based and volatile' source, with values varying from 3 to 28 per cent of its budget.

More importantly, he argued, if subsequent governments were allowed to count on land sale proceeds, they may be motivated to sustain a property boom.

'We've seen how it has happened elsewhere and this is not what we would like to get ourselves into. We want to avoid any incentive for governments to be keen, wittingly or unwittingly, to sustain the property cycle in one direction or another,' he said.

What about counting on rising corporate taxes? Mr Tharman said that while he hoped that corporate tax would continue to grow well, it may not increase as a percentage of GDP.

Such an increase is needed to pay for investments and social spending to take Singapore into the future, he said. The GST is a long-term measure as opposed to a 'last minute' approach in finding money, he said.


CHOOSE WORDS CAREFULLY

He was referring obliquely to Ms Lee Bee Wah's speech on Wednesday. The Ang Mo Kio GRC MP had spoken in Mandarin and said that one ought not think of building a toilet just before it was needed. 'As the Second Minister for Finance, I will have to choose my words more carefully,' said Mr Tharman, to loud laughter in the House.

He also replied to the International Monetary Fund's criticism, cited by Miss Lim, that Singapore was conservative in its approach, thus underestimating its true fiscal position.

He pointed out that the IMF did not object to Singapore's policy of excluding land sales as part of its revenue.

What they really wanted to know, he said, was the size of Singapore's reserves. 'But it's not in Singapore's interest to give this information to them,' he said.

Yesterday was the last day of the general debate on the Budget. Today, Parliament will move on to discuss the budgets of specific ministries.