CAR ALLOWANCE FOR SENIOR CIVIL SERVANTS (Tax exemption)

Column No : 1029

CAR ALLOWANCE FOR SENIOR CIVIL SERVANTS:

(Tax exemption): 15.

Prof. Ivan Png Paak Liang asked the Prime Minister and Minister for Finance if he will cancel the tax exemption for two months' salary of car allowance paid to senior civil servants, as this is inconsistent with a transparent compensation policy and taxation system, and causes an economic distortion in favour of high-income civil servants to the disadvantage of the private sector.

Mr Teo Chee Hean (for the Prime Minister and Minister for Finance): Mr Speaker, Sir, the Car Allowance Scheme for Senior Civil Servants was introduced in 1989 as part of the move towards a clean wage policy: it replaced the earlier scheme where eligible officers were provided with a car, which also was tax free. Hence, the tax-free element was carried over. The allowance was kept tax-free as a way to equalise with the private sector which tended to have equivalent benefits for their executives which also were not fully taxed at that time.

However, in 1994, when we moved Public Service salaries to benchmark against the private sector, we imputed the tax on the car allowance when the Public Service Division computes the total remuneration package for senior officers in salary benchmarking against private sector salaries using IRAS data. Hence, it is not the tax-free allowance that is used in the computation of the total remuneration package for benchmarking but the imputed tax is also included in calculating the total remuneration package. Hence, the tax exemption does not cause a distortion in favour of senior civil servants over the private sector.

The structure of senior public sector salaries was last revised and debated in this House in 2000 and the various components of the salary, including the car allowance, which is calculated with the imputed tax, are listed. So, that is all in the public domain.

As this imputed tax already enters into the benchmarking of salaries, MOF and PSD are currently reviewing the scheme with a view to making the tax element in the Car Allowance Scheme explicit rather than implicit. If this is done, it will not result in any change to either the benchmarking or net after-tax salaries, since the imputed tax was already included.

Mr Speaker: Miss Penny Low, we have one minute left.

Column No : 1030

CYCLING:

(Plans to encourage): 16.

Miss Penny Low asked the Minister for Transport if there is any plan to encourage cycling as a form of cheap short distance transport and healthy living among Singaporeans and, if so, (i) what are its plans and, if not, (ii) why not.

The Minister of State for Transport (Mrs Lim Hwee Hua) (for the Minister for Transport): Mr Speaker, Sir, in land scarce Singapore, road space is limited and should be used for the efficient movement of people and goods. Hence, my Ministry's focus is to promote and give priority to mass transport such as the MRT and buses, as they are efficient in moving large numbers of commuters. Nonetheless, cyclists are not precluded from our roads, and it is not uncommon to see some cyclists at most times of the day.

But we have to be realistic. Our hot weather, coupled with frequent rain showers, does not encourage many to cycle as part of their regular commute to work. Another reason is that there are bus stops or MRT stations within walking distance of the homes and work places of most people. Bus stops are generally located within 400 metres of a development, while MRT stations are usually located within the heart of housing estates or close to commercial centres.

Having said that, we do make provision for those who use bicycles for short journeys, for example, to nearby MRT stations.

3.00 pm

Mr Speaker: Order. End of Question Time.

[ Pursuant to Standing Order No. 22, Written Answer to Question No. 16 on the Order Paper is reproduced in the Appendix*. Question Nos. 8 and 17 have been postponed to the sitting of Parliament on 21st July 2005 .]

*Cols.