GST from tourists. Why not? In 2019, tourism receipts was $27.7 billion

GST, tax, system, benefits, contribute, lawrence, wong

Now that our borders are open, tourists will start to come back and we will be able to collect revenue from tourists’ spending through the GST.

In pre-COVID time, the bulk of net GST collected came from tourists and foreigners residing here, in addition to high income earners. At least 60% in fact. 

19 million tourists visited in 2019 with a total tourism receipts of $S27.7 billion. Think of the net GST collected.

Why do the Opposition PSP and WP oppose the GST hike that will deny us of this avenue to collect additional revenue from a very wide group of people? Why do the PSP and WP want to confine revenue to income and taking from future Singaporeans? 

Can't run a country this way

“The bottom line is that we cannot sustain a tax system where the bulk or all of the burden is borne by a small group of people at the top end. It will not be possible to hold our society together if only a small group of people are required to pay more all the time, while the rest simply get to piggy-back on their contributions to enjoy more benefits,” Finance Ministe Lawrence Wong said in his budget round-up speech this year. 

As our economy matures and population ages, a bigger share of the population will become economically inactive. This will in turn shrink the tax base for income-based taxation. “So, we cannot rely only on income-based alone, if we want to maintain a resilient and future-proof revenue base,” Mr Wong said. 

Why GST is so vital

Having a broad-based tax like the GST is very vital because it makes a direct link between our demands as voters and our as citizens, Mr Wong explained.

Break that link and we encourage irresponsible lobbying and playing to the gallery. Someone else will pay for the good things in life. Why not demand more?” 

Principle of collective responsibility

Our tax system is designed on the principle of collective responsibility.

“Everyone contributes towards the cost of delivering services, and everyone benefits from these services, but to different degrees.

“Those with greater means bear a higher burden. They draw less on Government support, but they still enjoy some benefits from the Government.

“Those with fewer means carry a lighter share, but they still contribute something, and in return they receive more benefits from the Government – more than they put in, and more than the better off.

“In this way we all do our part to help ourselves and one another, and we strengthen the trust that binds us together as a society. This is a fair and inclusive system,” said Mr Wong. 

The well-to-do contribute in many other ways

The well-to-do contribute in many other ways, and not just through income or wealth taxes. For example, many have set up businesses in Singapore, creating good jobs for Singaporeans and helping to develop new capabilities in our economy. Some also set up philanthropic foundations, contributing to our charities and other worthy causes.

In conclusion

In concluding his speech, Mr Wong said:

I started work more than 25 years ago as an economist in MOF. In that sense, I have been through many Budgets, even though this is my first time delivering one. Over the years, I have had the chance to study the fiscal systems of many other jurisdictions. I can confidently say that is unique in having such a highly progressive system of and transfers, while keeping the overall tax burden low for everyone, and especially for the middle-income.
 
We have a system that is progressive, fair and effective. It reflects our values – what we stand for, and who we are as a people, and it provides a strong foundation for us to build our economy and our society.
 
That does not mean we have a perfect system. We are continually reviewing and improving it. We are continually adapting and adjusting our approach, as circumstances change and as our society evolves.
 
After 25 years of public service, I know it is almost impossible for the Government to do anything that pleases everyone all of the time.
 
But I want to assure everyone that every move we make is considered very carefully – we weigh the costs and benefits, and the implications; we discuss extensively with all our stakeholders, especially our tripartite partners.
 
That is what the team and I in MOF have worked very hard to do in this Budget – to ensure a balanced and fair package of measures, adjusting what is necessary to meet our evolving needs, while bearing in mind our economic and social imperatives, and above all, upholding the principles of fiscal prudence and sustainability.
 
That is the approach we will continue to take in reviewing and updating our policies – never compromising on our principles and values, and always doing what is in the best interests of and Singaporeans.

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