EVERY year, after the Singapore Budget is unveiled, no matter how broad its scope and reach, inevitably some quarters come away disappointed. This year is no different, even as the Budget debate in Parliament kicks off on Tuesday.
With speculation rife over impending elections, there were high hopes that Finance Minister Heng Swee Keat's 2019 Budget would be brimming with goodies. In fact there were some big-ticket giveaways, including a S$6.1 billion fund to meet the Merdeka Generation's healthcare needs for people born in the 1950s; a S$1.1 billion package to celebrate Singapore's bicentennial; and S$4.6 billion over three years to help workers and companies upgrade.
But some begrudge the Budget for its absence of significant tax changes for corporates and individuals and the lack of taxes on the super wealthy. Others said the Budget and its one-off packages fail to address urgent issues like Singapore's triple demographic challenge of fewer babies, decreased immigration, and ageing population.
Indeed, when people view the Budget, more attention is usually paid on expenditure, rather than revenue. But Singaporeans should get away from seeing the Budget as an annual handout of goodies, as much as there may be grounds for surplus-sharing with citizens. The Budget reflects the country's spending priorities - on key areas like security, economy, education, healthcare - but where the revenue is coming from is no less, if not more, important. Drafting the annual financial statement involves major decision-making about the direction of the society and how the available resources should be best used to address the challenges the country faces, while moving towards its envisaged future.
Hence, each year's Budget should not be viewed in isolation. Each Budget builds on past Budgets as many schemes are multi-year in nature. Take for instance the help for companies and workers to stay on top of rapid advances in digital technology. The SMEs Go Digital programme, launched in Budget 2017, will be expanded this financial year, with more sectors to be added in future. Similarly, since Budget 2016, the Industry Transformation Maps (ITMs) have been rolled out for 23 sectors, covering 80 per cent of Singapore's economy.
Neither does the government base its long-term fiscal planning on episodic factors. Case in point : In Budget 2018, notice was served about an impending hike in the Goods and Services Tax. Of course tax hikes are rarely welcomed, but the GST announcement spurred greater reaction coming as it did off a hefty projected FY2017 surplus - the biggest in absolute value in three decades or so, but purely a result of exceptional contributions from statutory boards. In the ensuing debate in Parliament about the 2-point GST hike, expected sometime between 2021 and 2025, Mr Heng spelt out the government's stand - that a GST hike would be the responsible way to fund the country's future recurrent spending needs.
With Singapore's spending needs expected to rise significantly in the future, increasingly the focus of fiscal policy must be on ensuring sustainable revenue flow, while keeping the overall tax burden low, while addressing national priorities.