NTUC supports tax recommendations, but calls for steps to cushion impact of GST increase
The NTUC held a dialogue and workshops to discuss the recommendations of the Economic Review Committee on changes to Singapore's tax regime.
The unions are painfully aware that more than 100,000 workers are unemployed, and the competition for investments has become much keener. Therefore they support the measures that will create jobs for Singaporean workers through growing the economy. Union leaders understand the need for the tax changes. They support the overall recommendations. They welcome an offset package that will cushion the effect of the increase in GST for most Singaporeans.
Union leaders have also raised concerns about the impact, timing and implementation of the tax recommendations. These will be compiled and submitted to the Government.
Growth-oriented tax regime for job creation
In view of globalisation,it is easy for capital and talent to move across national borders to seek the best returns and earnings. With a growth-oriented tax regime, we will improve our competitive edge to attract our share of foreign investments and talent, and keep our local talent in Singapore.
The group relief and other provisions will make it easier for companies to start new ventures. We urge companies to be innovative in seeking out new markets. We hope that this will create even more jobs for workers.
Companies should invest more in workers' training
Companies will be able to invest more in workers' training when they have higher net income. They should do so. With a better-trained work force, they will have an added advantage. By investing in workers' training, companies are in fact investing in their own future. They should tap the various funding programmes that the government has introduced for training workers.
Public Transport
As motor-vehicle-related taxes shift to usage charges, public transportation system should be further improved.
The majority of Singaporeans do not own cars. While the shift of upfront ownership taxes to usage charges will meet the aspiration of car-ownership to some extent, it will not benefit workers and Singaporeans who commute on public transport.
The government should continue to improve the public transportation system, to make travelling more seamless, convenient and quick. This will increase our national productivity.
Cushion impact of GST increase
The timing of the GST increase should be carefully considered. It must not make it more difficult for workers who still face wage cuts, wage restraint and even retrenchment.
While we recognise that the GST gives a more resilient tax base, the impact of the GST increase from 3 to 5% will be felt by all Singaporeans. We are glad that the ERC has strongly recommended that the government provide an offset package to keep the negative impact on Singaporeans to a minimum. The government should do so. The offset package will alleviate the hardship of Singaporeans, especially the lower and middle income earners.
Our union leaders noted that in the previous rebate and offset packages, the distribution was based on type of dwelling. The coverage of the offset package should be more comprehensive so that no one who needs help will be left out.
Community and self-help organisations should step in to help those who may fall through the cracks, such as the unemployed or retirees who are living alone.
We urge the Government not to raise the GST rate of 5% for at least five years to give certainty and stability.
Not by Tax Alone
Unionists understand that the Economic Review Committee is studying a range of other issues to make Singapore more competitive. They look forward to discussing the recommendations as soon as possible.
Comments by Matthias Yao, NTUC Deputy Secretary-General
We face severe challenges ahead. If we are slow to react and are complacent, we will fall behind other countries that are doing their best to attract investments and talent. We can already see how some countries hollow out when they lose their competitiveness. Investors move out, talents leave, jobs are lost, and workers suffer. We must not let that happen to Singapore. The tax changes are critical in strengthening our economic capacity and competitiveness. We must make the changes when we have the capacity to do so, not when it is too late.
Workers will feel the impact of a GST increase and will be understandably concerned. NTUC will reflect the concerns to the Government. The ERC has recommended concrete steps to minimise the impact. We are confident that the government will take the recommendation seriously. We had the experience of implementing the GST in 1994. We can draw useful lessons from that exercise.
Workers are particularly concerned about profiteering. We urge companies not to take this as an opportunity to increase prices unjustifiably.
Our NTUC co-operatives will do what we can to cushion the impact. When the GST was introduced in 1994, our NTUC co-operatives absorbed the GST for a number of months. We are studying how we can help again. We hope that other businesses would do likewise to help lower-income Singaporeans.
