SINGAPORE – Budget 2023 has been a delicate balancing act to find the sweet spot amid a tight fiscal position and competing demands, Deputy Prime Minister Lawrence Wong said on Friday.

Balance was a key theme of his speech: Between more taxes and more handouts; between various priorities of the day, as “the Budget cannot cover everything”; and between increasing corporate taxes and maintaining competitiveness, among other things.

He explained in Parliament how the Finance Ministry planned to balance the Government’s books, while responding to MPs who had called for more cost-of-living support or more help for certain groups or areas.

“So, we enhanced our parenthood and family-related schemes in this Budget. Next time, we will look at other schemes, so everyone will get a chance,” said Mr Wong, adding that every Singaporean still stands to benefit from the Budget.

In his round-up speech, he addressed questions raised by 58 MPs over three days of debate, which revolved around whether the Government was taking too much and giving back too little, if it was doing enough to stay competitive and help businesses and workers, and if it was doing enough to help Singaporeans and households in need.

“We want to get back to a more sustainable fiscal position, but we cannot taper down support too quickly because the economic outlook remains uncertain,” he said.

“The Government remains very focused on advancing the well-being of the broad middle of society,” added Mr Wong, who is also Finance Minister.

The middle-income group in Singapore pay less taxes than their counterparts in other advanced societies like the United States and Britain, and also receive more in benefits than they pay in taxes, he added. He noted that Singapore’s tax to gross domestic product ratio, at 14 per cent, is considerably lower than in most other advanced economies.

“Compared to citizens elsewhere, Singaporeans pay much less in taxes and yet are able to enjoy high quality public services. At the same time, this low tax burden rewards hard work and enterprise, and allows our people and businesses to keep most of what they earn,” he said in a 90-minute speech wrapping up the Budget debate.

The House on Friday endorsed the $123.7 billion Budget, which had included a suite of measures to support parents and families, as well as financial support measures to combat the rising cost of living and inflation.

Mr Wong noted that Singapore’s tight fiscal position is very much a reality over the medium term. 

“That is why we have to proceed with the second step of the increase in goods and services tax (GST) in 2024 as planned. Deferring this will only store up more problems for the future and will leave us with less resources to take care of our growing number of seniors,” he said.

The GST rate increased from 7 per cent to 8 per cent on Jan 1, 2023, and is slated to rise another percentage point to 9 per cent on Jan 1, 2024.

Mr Wong said that while the Government wants to help Singaporeans tackle cost-of-living pressures, it must be careful not to inadvertently generate more demand and worsen inflation.

Acknowledging that many MPs have made good suggestions and that there may well be very good reasons for more government intervention, Mr Wong said all of that means additional spending.

Additional spending will then need to be anchored by a fiscal plan that is sound, sustainable and fair, he said.

Mr Wong said he wanted to set the record straight on economic growth. Singapore remains focused on growing the economic pie and has not moved from a pro-growth to a pro-redistribution approach.

“Only then can Singaporeans build better lives for themselves and their families, and only then will we have the resources we need to redistribute, strengthen our social compact and progress as one people,” he said.

But given the more challenging external environment, Singapore has to redouble its efforts, build more capabilities and work hard to be more competitive and anchor more quality investments.

At the same time, it cannot “score own goals, do moves that will price ourselves out”, he said, addressing calls from Workers’ Party MP Louis Chua (Sengkang GRC) and Non-Constituency MP Hazel Poa to increase taxes for multinational corporations.

Mr Wong said multinational corporations here are not stuck in Singapore permanently and have cheaper or more inviting options for them to be headquartered elsewhere.

He said: “Many members in this House now are concerned that we are not sufficiently focused on growth, that if we are faced with a shrinking pie, contentious disputes over how to distribute limited resources will be inevitable, which can be very socially divisive, as we have seen in many other countries. 

“But sir, in fact, we have always taken a balanced approach in our economic development and strategies. Our focus has always been to grow the economy, not for its own sake, but as a means to improving the well-being and the lives of everyone in Singapore.”

Mr Wong also spoke about Budget 2023’s additional support for groups that are facing difficulties, such as lower-wage workers and lower-income households with young children, in response to MPs who had raised the issues of inequality and social mobility.

He noted that Singapore had long recognised the problems with an unbridled winner-takes-all style of meritocracy that WP MP Leon Perera (Aljunied GRC) spoke about, which is why it had set out to achieve a more open and inclusive meritocracy more than a decade ago.

“We are actively working on all fronts to minimise social barriers and encourage mobility, because this is what Singapore has always been about, and must continue to be,” he said.

Mr Wong also spoke on the need to ensure that the reserves are well protected, but added that the Government is unlikely to return the $40 billion that it took out during the Covid-19 pandemic due to the tight fiscal position.

He said Singapore has to consider the major risks that it may face – war, pandemics and climate challenges – and should not “blithely spend more from the reserves”, which he said members of the opposition had proposed.

“Let’s maintain a strong fiscal foundation so that Singapore can continue to prosper and thrive for many more years in this troubled world,” he said.