PAYMENT OF INCOME TAX (Request for Legislation)

Mr Ng Kah Ting asked the Minister for Finance whether he will consider introducing legislation to amend the Income Tax Act with a view to (a) directing all employers to pay to the Comptroller of Income Tax the necessary annual income tax deductions in respect of their employees who are liable to pay such tax, on a fixed periodic basis instead of the present system of individual submissions and settlement in one lump sum or by instalments; (b) directing all financial institutions, namely, banks and financial companies to deduct a certain percentage of the interests earned by depositors from time deposits placed with them; and (c) allowing all those who are liable to pay income tax but have not done so to declare their income and pay whatever taxes are due without fear of harsh penalties or prosecution.

The Acting Minister for Finance (Mr Lim Kim San): Mr Speaker, Sir, in answer to the first question posed by the hon. Member, I would say that there is no necessity to make legislative amendments in the Income Tax Act for this purpose because there is already in force, for many years now, a system whereby employees can pay their income tax through their employers by monthly deductions from their salaries. This achieves the objectives which the hon. Member has in mind.

On the second suggestion by the hon. Member, I must say that from available records, most taxpayers and their wives declare the interest they receive from time deposits placed with financial institutions. It would, therefore, be inappropriate to create extra work for all financial institutions and penalise all taxpayers by withholding tax from interest, on account of a few errant taxpayers or their wives who fail to declare such interest.

Finally, regarding the Member's suggestion of an amnesty for defaulting taxpayers, I would like to point out that income tax has been in operation for about 30 years and people are all aware of their responsibility to declare their income annually and pay their taxes accordingly. There is, therefore, no valid reason for anyone to plead ignorance. Mr Speaker, Sir, Singapore prides itself on the fact that its taxes are levied fairly and applied firmly. Granting one amnesty may lead to expectations of more amnesties in the future, and taxpayers would then prefer to wait and pay their taxes during such amnesties. I would rather keep faith with our honest taxpayers who have complied with the tax laws. However, I will say this to those who now wish to come forward and declare their income, that they will be subject to lesser penalties than would be imposed if they are subsequently found to have avoided tax.