III - REVENUE AND TAX CHANGES

Mr Speaker, Sir, I shall now turn to Government's revenue position and proposed tax changes for FY91.

Revenue collection for FY90 is expected to reach $16.9 billion, an increase of 9.7% over the FY89 collection of $15.4 billion. The increase is a result of the strong and broad-based economic growth in 1990. This year, our economy is expected to slow down because of uncertainties created by the Gulf war and slower growth in the major developed countries. Revenue in FY91 is therefore expected to show a modest increase of 1.9% to $17.2 billion. However, with total expenditure estimated at $15.8 billion, a surplus of $1.4 billion is still expected. This amount will go towards augmenting our pool of reserves, which we can draw upon in bad times.

Over the years, we have gradually reduced our corporate and individual tax rates. Singapore's tax structure is now among the most competitive in the world. There is therefore no need for us to lower tax rates further to maintain our competitive position. Although growth in FY91 will slow down, the economy should have no difficulty achieving a growth rate of 3-6%. A fiscal stimulus for FY91 is therefore also not indicated. However, our revenue position does offer Government scope to pass part of its surplus back to individuals who have contributed to make this another successful year for Singapore. I will elaborate on this later.

The state of our economy is visible evidence of the success of Government's fiscal policies. Government will continue to provide a conducive environment for business to thrive and prosper. As in the past, we will use tax incentives to promote the development of specific industries. These industries will include those with high potential, in particular those which are knowledge- and skill-intensive. Amongst the tax incentives for this Budget, I will be introducing a change to our tax system which will further encourage our companies to invest and expand overseas. With our small domestic market, it is imperative that we be export-oriented and outward looking. By venturing abroad, our companies will gain access to new markets, resources and technologies.

Last year, I indicated my intention to introduce legislation on a comprehensive goods and services tax or GST but to defer its implementation for as long as Government's revenue position permits. In this regard, I would like to inform the House that work on a draft GST legislation has been completed. A White Paper together with the draft legislation will be tabled in Parliament when it is ready.

Let me now deal with the tax changes for FY91.