OTHER TAX CHANGES

Property Tax

The present 50% rebate on property tax is due to expire on 31st December 1988. Because the outlook for the economy next year is uncertain, property tax rates for 1989 will be reviewed during the second half of this year.

Suspension of Taxes on Public Utilities and Telephone Services

The 10% tax on electricity and gas was suspended for the period 1st November, 1985 to 31st March 1988. The 20% tax on domestic telephone services and trunk call services to West Malaysia was suspended since 1st April 1985. I have decided that these taxes be further suspended until 31st March 1989.

Foreign Workers Levy

In the last Budget Statement, I announced that the Government had decided to allow a controlled revolving pool of foreign workers on short-term work permits to remain beyond 1992 in the manufacturing, hotel and construction sectors and as domestic servants.

The demand for foreign workers has been increasing rapidly. More than half of the 48,000 jobs created in the manufacturing sector last year were filled by foreign workers. In the last three months, manufacturing companies have been recruiting about 2,500 foreign workers each month. The Government has therefore decided to increase the levy for foreign workers from $140 to $170 per month with effect from 1st April 1988. The levies for foreign construction workers and domestic servants will, however, remain unchanged at $200 and $120 per month respectively.

The increase in levy will not affect Singaporean workers and permanent residents. Those foreign workers recruited before 1st April 1987 and who are on the CPF scheme will also not be affected unless they change jobs. As the foreign workers affected by these levy changes constitute less than 3% of the total workforce in Singapore, the impact of the levy increase on our economy should be minimal.

The Government will continue to monitor the demand for foreign workers vis-a-vis the economic situation. As a pricing mechanism, the levy will be adjusted according to the demand for foreign workers or to changes in economic conditions. If the demand continues to rise rapidly, the levy will have to be further increased.