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SINGAPORE: Singapore does not need an independent tax council because the country remains fiscally prudent, Minister of the Office of the Prime Minister and Second Finance Minister Indranee Rajah said on Friday (February 26), responding to a suggestion from the deputy Workers Party, Jamus. Lim.
Associate Professor Lim (WP-Sengkang) had proposed the creation of an independent fiscal council to assess all major policy proposals from the Government and members of Parliament for budgetary implications. The cost of establishing the office was estimated at S $ 20 million.
Such fiscal councils can provide public evaluations of fiscal plans and macroeconomic and budget projections, and may be relevant now after an “unprecedented deficit during the last term of government,” Associate Professor Lim said.
Ms Indranee, who is also Second Minister of National Development, said that most of the independent fiscal institutions established in other countries were created in the wake of the global financial crisis of 2008-2009. Its main objective was to prevent future fiscal crises, he added.
“In those cases, fiscal rules had been insufficient to ensure prudent management of public finances before the crisis,” he said in the debate of the Supply Committee of the Ministry of Finance.
“The context in Singapore is very different. The evils that led to the need for IFIs in other systems are not present in our system and we continue to monitor our fiscal prudence very closely.”
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He added that Singapore is one of the few countries that today has a AAA credit rating and that the government has executed balanced budgets in each term of government, except for major crises.
“We have implemented a robust system to control spending and discuss budget matters, without incurring the costs of establishing additional fiscal monitoring institutions,” he said.
“More importantly, the government has been outspoken about the difficult budget decisions we make.”
He has not shied away from highlighting the need to increase the GST to cope with the longer-term rise in health care and social spending costs, he said.
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“A sound and intellectually honest analysis is important to foster a more informed parliamentary debate. But ultimately, there is no substitute for having the political courage to make difficult budget decisions,” he added.
He noted that the creation of independent fiscal institutions in other countries did not solve their fiscal problems.
“Ultimately, we cannot outsource honest and direct debate. We must focus our time and energy on having robust, honest and constructive discussions that decide on tradeoffs and not delegate responsibility,” he said.
Following Ms Indranee’s speech, Associate Professor Lim asked if a second opinion on the country’s fiscal outlook would be valuable in the future given the changing macroeconomic and fiscal environment.
Reiterating that Singapore’s situation is different from other countries, Ms Indranee said that the UK Office for Budgetary Responsibility has been criticized for overly optimistic forecasts.
“A second opinion doesn’t always solve the problem,” he said.
Associate Professor Lim also noted that an independent fiscal council would not simply be a constraint on the government and could comment on the proposals of all MPs.
To this, Ms Indranee replied: “In essence, what the scholar is really asking is that this council serve the opposition members because the PAP members don’t ask for it and the Government doesn’t need it.
“So it is effectively a request from a tax council for S $ 20 million to help members of the opposition with their proposals.”
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Responding to questions from MP Desmond Choo (PAP-Tampines) about supporting social and environmental outcomes through funding and corporate regulatory levers, Ms Indranee said the government has more than doubled spending in these areas. during the last decade.
Singapore recently launched the Green Plan 2030, which outlines the country’s ecological goals for the next 10 years.
In terms of environmental performance, Singapore has one of the lowest carbon emissions per dollar of GDP in the world, Ms Indranee said.
“Based on this, we are working to peak our emissions around 2030 and achieve our long-term net zero aspirations as soon as feasible,” he added.
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However, there are still areas for improvement, such as the domestic recycling rate, which the government expects to increase to 30 percent by 2030, he said.
MP Henry Kwek (PAP-Kebun Baru) asked about plans to turn Singapore into a green finance hub, to which Ms Indranee said green finance will be an important enabler of Singapore’s Green Plan.
As part of its Green Finance Action Plan, the Monetary Authority of Singapore has convened an industry-led working group to work on a transitional and green taxonomy approach, Ms Indranee said, adding that this should be completed on March 11.
