TAX CONCESSIONS OF 1985/86 BUDGET (Effect on Revenue)

Mr Chng Hee Kok asked the Minister for Finance what is the effect on the Government's revenue of the tax concessions announced after the approval of the 1985/86 Budget in March 1985.

The Minister for Finance (Dr Hu Tsu Tau): Mr Speaker, Sir, a number of tax concessions were announced on 26th July and 31st August 1985. It was further announced on 24th October that the tax on PUB gas and electricity charges would be suspended for two years. It is estimated that the combined effect of these tax concessions will result in a revenue reduction to Government of around $550 million in a full year.

In addition, statutory boards have announced tariff reductions which will result in revenue reductions amounting to $120 million per year.

The total reduction in public sector revenue, resulting from the various tax concessions and statutory board tariff reductions announced since the 1985-86 Budget was approved, is estimated at $670 million in a full year.

In addition to the foregoing, Government has announced the bringing forward of several public sector projects. Expenditure on these will amount to $245 million in fiscal year 1985-86. Measures to stimulate the economy announced to-date, therefore, total $915 million, taken over a full year.

Mr Chng Hee Kok (Radin Mas): Will the Minister explain to the House whether there is a deficit in revenue and how will the shortfall be financed?

Dr Hu Tsu Tau: In the normal way, Government is reviewing its fiscal position and, around early 1986, we will be reviewing the whole tax question in the light of Government's fiscal position at that time.

Mr Chng Hee Kok: From the feedback obtained by his Ministry, are these measures having the desired effect?

Dr Hu Tsu Tau: It is too early to say.