Chia Shi teck suggested we should use some of our hidden cookie
jars from sale of land first before raising GST. Will the
government take this suggestion?
Thursday November 16, 2006
Letter from Chia Shi Teck
Singapore 's shift from direct taxation to indirect taxation
through the GST and other consumption taxes is the right way to go
to keep the country competitive and relevant in a globalised
world.
I agree that raising the GST rate is a realistic option to increase
the Government's coffers to meet projected increases in social
spending. I am happy to hear the Government plans to spend more to
meet the demands of an ageing population.
However, with due respect, I am not convinced that the increase
should be effected now or in many years to come, given that our
expenditure on social services is so low by world standards.
Prime Minister Lee Hsien Loong said the Government is planning to
change the Constitution to allow realised capital gains to be
included as revenue for the purpose of government drawdown for
expenditure.
May I ask the Government to look at all other substantial sources
of income that go straight into our national reserves?
Take the proceeds of sale of state land, for instance. Billions of
dollars are collected each year. This sum is not included as
revenue in the Budget. Why?
I raised this when I was a Nominated Member of Parliament
(1992-1994). The answer given then and now is that the sale of land
is not an income; it is the transfer of a tangible state asset to
cash.
Our so-called sale of land is on a leasehold basis, mostly a
99-year tenure for commercial and residential purposes, while
industrial and recreation usage come with shorter tenures of 60,
30, 15-year and or even shorter terms.
The Government spends much money to turn raw land into productive
land. The sums spent each year on infrastructure are allowed for in
the Budget, yet when land is sold as a result after enhancement,
the income is not included as revenue. I see it as a matter of
accounting.
My suggestion was for the sums collected, if we want to be prudent,
to be amortised over the lease tenure that is, a $99-million
land sale income on a 99-year tenure would mean a $1-million income
per year for 99 years. Hong Kong , cited by Mr Lee as a primary
competitor, includes land sale proceeds as a key source of its
income.
Take the Marina South land for easy reference. The Government
reclaimed the land, spent further billions on infrastructure and
has now started selling the land. It is not equitable to charge out
the expense and not include the sales proceeds thereafter.
If we do not want to include the sales proceeds, then let us have a
separate book for land and infrastructure expenditure. That way, we
would have sufficient money left for other social purposes.
