INLAND REVENUE AUTHORITY OF SINGAPORE (Rising expenditure)

INLAND REVENUE AUTHORITY OF SINGAPORE

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(Rising expenditure): **

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Mr Steve Chia Kiah Hong asked the Prime Minister and Minister for Finance what are the reasons for the Inland Revenue Authority of Singapore's rising expenditure since 2002, despite the rising numbers of e-filing which saves administrative cost and decreasing head counts.

Mr Lee Hsien Loong: IRAS' operating expenditure in FY2004 has increased to $183.3 million in FY2004 - from $166.6 million in FY2003 and $164.6 million in FY2002. But this increase is related to a one-time investment in a new information system called the Inland Revenue Interactive Network (IRIN). It replaces the previous system which has outlived its useful lifespan and needs to be replaced due to technological obsolescence.

IRIN will help improve IRAS' tax processing capabilities and provide a wider range of e-services for taxpayers. With IRIN, taxpayers including companies and GST traders will be able to enjoy a comprehensive suite of transactional, enquiry and account management e-services at their personalised tax portals.

As IRIN is a major project, it is being implemented over four years. During the transition from the previous system to IRIN, IRAS has had to incur additional expenses in maintaining and operating the old system as IRIN is being developed and phased in. This means extra manpower and operating costs during the transition period until the previous system is fully retired in 2006.

The introduction of IRIN has made necessary not just higher once-off costs in computer services but also in staff costs during the period of development. As fewer staff are required to operate IRIN, IRAS released about 120 staff under the Staff Early Release Scheme at the end of FY2004. The once-off compensation payout to these staff added to the staff-related costs that year.

When IRIN is fully implemented, IRAS expects to exploit its full potential to achieve a quantum leap in operational efficiency and enhance its taxpayer service.

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