OTHER TAX CHANGES

Tourism Cess

Last year, the tourism cess rate was temporarily reduced from 4% to 3% for a period of one year. This was to help hotels and restaurants tide over the poor business conditions shortly following the Gulf War.

The tourism sector has recovered from the sharp decline in tourist arrivals in the first half of 1991. For the whole year, tourist arrivals increased by 1.7% over 1990. Growth in the second half of 1991 is likely to continue into 1992. With this recovery, the tourism cess rate will be restored from 3% to 4% with effect from 1st April 1992.

Duties on Liquors

Duties on liquors are imposed to constrain the growth in liquor consumption. They need to be revised periodically to adjust for the effects of inflation. As liquor duties were last revised in 1987, I have decided to raise duties on liquors.

The import and excise duties on hard liquors will be increased from $27.00 per litre to $30.00 per litre. The import and excise duties on sake will be raised from $15.50 per proof litre to $20.50 per proof litre. On still wine and vermouth, the duties will be increased from $8.50 per litre to $9.50 per litre while that on cider and perry from $3.00 per litre to $3.30 per litre. Duties on arrack and pineapple spirit will be increased from $13.00 per proof litre to $14.50 per proof litre.

The excise duty on beer will also be raised from $2.50 per litre to $2.80 per litre while that on stout will be raised from $2.50 per litre to $3.10 per litre. On samsoo, the excise duty will also be increased from $10.00 per proof litre to $11.00 per proof litre. Details of the duty increases are set out in the Appendix (Cols. 505 - 512). Appendix - DUTIES ON LIQUORS (Cols. 505 - 512)

The increases in duties will take effect from today. The revenue yield is estimated at $23 million.

Restriction of Duty Free Privilege on Liquors

At present, travellers arriving in Singapore other than from Malaysia can bring in duty-free, limited quantities of liquors for their personal consumption. This is a privilege intended for international travellers. With travelling becoming more popular, the duty foregone arising from the duty-free concession has reached some $40 million a year. This loss will increase further as passenger arrivals to Singapore continue to grow.

To contain the revenue loss, I have decided with effect from 1st June 1992 to restrict the eligibility of duty-free privilege for liquors only to travellers who spend not less than 48 hours away from Singapore before their arrival. This will ensure that only bona-fide travellers benefit from the concession. The restriction is not unique to Singapore. Hong Kong and Malaysia have imposed similar restrictions on the granting of duty-free privileges. The existing practice to disallow duty-free concession in respect of travel between Singapore and Malaysia will continue.

Water Conservation Tax

Water consumption follows economic growth closely. As the economy continues to expand and our standard of living rises further, the demand for water will continue to grow. We import a large part of the water we consume. Water will hence always be a scarce resource, far more valuable than its production costs alone. We need to continually encourage water conservation.

The demand for water has increased by an average of 3.8% each year since 1986. The growth in domestic demand has been particularly strong, increasing by 5.8% last year. To restrain the growth in water consumption, I intend to increase the Water Conservation Tax on domestic customers who consume more than 20 cubic metres of water per month from 5% to 10%. The Tax for non-domestic and shipping customers will also be increased from 10% to 15%. The tax change will take effect from 1st April 1992.