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While speaking at the Finance Ministry’s Supply Committee debate on February 26 (Friday), the Workers’ Party (WP) Member of Parliament (MP) Jamus Lim asked the Government to think about the creation of a fiscal council independent to improve all important policy proposals for both budgetary and macroeconomic purposes.
He explained that tax councils are made up of agencies made up of professional officials whose job it is to evaluate policy proposals to offer budget implications. They are independent and are expected to provide nonpartisan evaluations of the expected effects of the policy on income and expenditures.
“As such, they serve as trusted public institutions that can help qualify reform ideas and proposals, to help ensure the economy’s commitments to sustainable public finances,” he explained.
Regarding the functions of fiscal councils, Mr. Lim said they offer public evaluations of fiscal plans and performance, as well as evaluate and provide macroeconomic and budget projections.
While the Ministry of Finance (MOF) may already carry out these functions, the tax councils would provide advice that is non-partisan and can analyze policy proposals from policy makers.
“On the contrary, the fiscal council will provide advice – the key word here is advice, as it has no formal power to determine the budget – to the entire Parliament, at their request.
“As such, the council would be available to analyze policy proposals offered by PAP deputies, as well as by opposition parties,” he said.
In his speech, Lim also noted that tax tips are common around the world, especially among advanced economies. Some of the examples you provided include the Netherlands Office for Economic Policy Analysis, the Congressional Budget Office in the United States, the Parliamentary Budget Officer in Canada, and the United Kingdom Office of Budget Responsibility.
He also claimed that former WP Low MP Thia Khiang also raised a proposal to create an independent office for budget responsibilities during the 2017 Supply Committee discussions.
“This proposal builds on that, detailing the functions of the proposed agency and its service to the entire legislature, and underscores today’s distinctive macro-fiscal environment,” said Mr. Lim.
If that’s not all, the Sengkang GRC deputy also pointed out that there is evidence showing that tax councils can improve tax performance, particularly when given legal and operational independence, are tasked with monitoring tax rules, and are backed by a strong media presence. .
Mr Lim added that such advice can be very helpful at this point in Singapore’s economic evolution, given that the country has its largest budget deficit since independence.
“I propose that the Ministry of Finance consider the formation of an independent fiscal council, the Singapore Parliamentary Budget Office, seeded with an initial $ 20 million, and charged with the mandate of rating all major policy proposals formally submitted by members of the Parliament, for budgetary and macroeconomic implications ”, he concluded.
MP Indranee Rajah rejects the need for additional fiscal monitoring institutions
In response to Mr. Lim’s proposal, Second Finance Minister Indranee Rajah stated that many of the tax councils, which she addressed as Independent Tax Institutions (IFIs), around the world were created in connection with the Financial Crisis Global in 2008 and 2009 with the intention of preventing future fiscal crises.
“However, the context in Singapore is very different. The evils that led to the need for IFI in other systems are not present in our system and we continue to monitor our fiscal prudence very strictly, ”he said.
Ms Indranee also noted Singapore’s strong financial position, which includes its AAA credit rating, the execution of balanced budgets in each term of government and barring major crises.
He went on to state that Singapore currently has a robust system in place to “scrutinize spending and discuss budget issues without incurring the costs of establishing additional fiscal oversight institutions,” such as the annual budget debate and Parliament’s Estimates Committee, which verifies the budget .
The Second Minister also noted that the UK Office for Budgetary Responsibility has been criticized for “overly optimistic forecasts and has had to downgrade its forecasts several times since its inception.”
