PAYROLL TAX (Request for waiver)

Mr Ang Nam Piau asked the Minister for Finance, as employers are contributing towards the Skills Development Fund and the Central Provident Fund in respect of their employees, if he will consider waiving collection of the Payroll Tax.

The Minister for Finance (Mr Hon Sui Sen): Mr Speaker, Sir, the simple answer to the Member's question is No.

Contributions to the Skills Development Fund, the Central Provident Fund and the Payroll Tax are made for entirely separate purposes. The Payroll Tax is an important source of Government revenue and it is needed to defray increasing Government expenditure. Payroll Tax will, therefore, continue to be levied.

Collectively, the contributions have the effect of raising the cost of labour to employers. This should force employers to economise in their use of labour and to upgrade their operations through mechanisation. Labour is now a scarce resource and it is important that it is used efficiently. Waiving Payroll Tax will hinder us in this objective.