ANNUAL BUDGET STATEMENT PART III - FISCAL POSITION, TAX CHANGES, AND OFFSETS FOR THE GST

[Mr Speaker in the Chair]

Dr Richard Hu Tsu Tau: Mr Speaker, Sir, I shall now move on to describe our fiscal position and the proposed tax changes for FY93. I will also be announcing the corporate, personal and other indirect tax changes which form part of the GST package.

We have a healthy budget balance. Government had a surplus in FY92, mainly because its operating revenue was buoyant. For FY93, operating revenue is estimated to be $17.2 billion, whilst the operating and development expenditure is budgeted at $15.5 billion, so that a modest operating surplus of $1.7 billion is expected. Given sustained economic growth, revenue should remain buoyant and if costs are kept under control, we should continue to have budget surpluses in the next few years.

The target date of April 1994 for the introduction of GST has already been announced. Our favourable fiscal outlook will allow the GST to be implemented in a revenue-negative way. The GST will be introduced with a generous package of offsets, comprising corporate and personal income tax reductions, rebates and subsidies which, taken together, will exceed the GST collected in the first few years of its implementation. We will ensure that as far as possible, no household will be worse-off when the GST is implemented.

This year, I will discuss proposed tax changes in two parts. Part I will be concerned with tax changes specific to FY93. It will also deal with initiatives we are introducing this year to develop an external economy and to attract new investments into Singapore. Part II will be concerned with GST-related changes. It will deal with corporate and personal tax cuts, property tax rebates, compensating adjustments to existing indirect taxes, as well as additional rebates and expenditures to help lower income groups cope with the GST.