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SINGAPORE : Proposed changes to Net Investment Income (NII) also came up for debate in Parliament on Wednesday.

MP for Marine Parade GRC Ong Seh Hong called on the government to reconsider its plan to include capital gains as part of the NII.

He said Singapore has guarded its national reserves very carefully but if capital gains were included in the NII, irresponsible governments in the future could spend it.

Dr Ong said, "If we always take profit whenever there are capital gains, and spend away all or part of the capital gains, then over the long term, we'd not be able to enjoy the consistent growth that we are used to. And in our real asset value, net of the inflation will remain stagnant or even diminish over the years."

So if there must be changes, Mr Ong said there must be safety measures.

This includes a cap on the NII used annually and limiting usage of capital gains to investments made during that government's term in office.

Meanwhile, Non-Constituency MP Sylvia Lim questioned why the government did not wait for the changed definition of the NII to be released before making its decision to increase GST.

She said this was because the change would have an impact on government revenue.

Ms Lim said, "Since it's only a matter of months before the constitutional amendment is tabled, why not discuss this whole question of GST increase together with that amendment. It may turn out later that we find the NII amendment itself can contribute say an additional S$2 billion, so that we can manage the volatility of the flows. When and if that happens, there will be no need to tax the people via the GST increase. Instead, by implementing the GST increase now, ahead of the NII amendment, the government is not being fair to those interested to find out whether the GST increase is really needed."

The House had been told previously the new NII would include realised capital gains - now, it is restricted to interest and dividends.

The government has said the changes are still being worked with the President, and details will be released in the coming months.

Ms Lim also brought up other revenue generators like the stamp duties from properties and the upcoming Integrated Resorts.

She said it would have been more prudent to look at these sources of revenue first before implementing the GST increase. - CNA/ms

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