But the government will ensure the tax system should be fair and sustainable.
Finance Minister Heng Swee Keat said besides spending prudently and effectively there is a need to grow Singapore's revenue through new taxes or raising taxes over time.
During his Budget 2017 round-up speech, the minister noted that this challenge of raising revenues is not unique to Singapore.
"If you look at many other countries, the need for more revenue to meet spending needs is a common theme that cuts across different systems. For example, Hong Kong had announced in its recent budget that it would be setting up a tax policy unit to comprehensively review its tax system. One of its objectives would be, and I quote, to 'explore broadening the tax base and increasing revenue, so as to ensure that adequate resources are available' to support sustainable development," he said.
However, such tax hikes should be both fair and sustainable. Mr Heng said it should be fair and progressive across income groups.
"What this means is that those who are better off must contribute more. In recent Budgets, we have continued to make our personal income tax and property tax rates more progressive, even as we introduced or enhanced permanent schemes such as Silver Support and Workfare to provide more support to lower-income groups," he explained.
In terms of sustainability, the tax system should reward efforts by individuals and enterprise by companies, ensuring that Singapore continues to be an attractive place to work and do business.
"In more recent years, more countries have lowered or announced their intention to lower corporate income tax rates. The UK has lowered its corporate tax rate from 30% to 20% over the last ten years, and plans to further lower it to 17% by 2020. The new administration in the US has also indicated plans to cut corporate tax rates," he stated.
He furthered, "Third, sustainability is also about striking the right balance between current and future generations. We have spent prudently, built up our reserves, and tapped on their returns judiciously. Ms Sylvia Lim suggested using the proceeds from land sales. Now, the proceeds from land sales go into past reserves, and it is because of this prudence that we are able to build up our reserves, and we can use part of these returns for our expenditure. So we must remain disciplined and prudent in spending the returns of our reserves, so that they remain a stable and sustainable source of revenue over the long term."
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