Response of the day: Lawrence Wong’s response to WP’s question on reviewing rules on NIRC


Workers’ Party Leon Perera asked Finance Minister Lawrence Wong on reviewing the rules on Net Investment Returns Contribution (NIRC) and what would be the optimal level of reserves during the Budget Debate on Mar 2. This is Minister Wong’s reply.

“When is the next reasonable interval when we might review our reserves rules? Is there an optimal level of reserves? It’s very hard to answer these questions because I don’t have a crystal ball. Who knows what will happen to the world in the next 30 years or more? Really, can anybody predict? It’s almost impossible.

What would trigger us to change? I think it would have to be something really very disruptive, not just one-off, but on a permanent basis and we’ll have to study the options very, very carefully at that point in time, because there are deep, deep implications if we were to change anything on the reserves rules, deep implications for intergenerational equity, essentially resulting in our next generation having to pay more taxes as I said and having less to deal with any emergencies in the future. And that’s why I’d say not something that we will do today because we have other options. We have the GST which we can implement in a fair way, we have other tax options. And that is the reason why I wonder maybe this is taking it a little bit too lightly because why turn to the reserves when we have all these options?

And why make the GST into the last resort? But reserves – ok, future generations – never mind, lets do it. But GST cannot touch. Why? Why take that approach? Especially when the way we have implemented the GST is not the way the Workers’ Party has characterised it. It is not and you know it too. I’ve shown the charts, I’ve explained it. We’ve explained it before in multiple times and we’ve reiterated our explanation. So if you understand this then why are your proposals anything but GST increase? Even reserves can be touched, but not GST increase. That part, honestly, I can’t understand.

It makes me wonder why Workers’ Party cites that the GST increase will hurt the poor. It doesn’t, I’ve explained it. And on that basis, they say they cannot support the Budget? But really? Do you know what you are saying then? You don’t want to support all the things we have in this Budget to uplift the wages of lower income workers – Workfare, progressive wages, to help vulnerable families with KidSTART? You are rejecting all of that?

I find it hard to understand, frankly, on the misguided view that GST hurts the poor, which it doesn’t. And I can only therefore ask whether you are taking things too lightly, or whether you are raising this in opposition because of other reasons, political reasons, or other things, as opposed to seriously looking at the facts and doing what’s right for Singapore.

The Workers’ Party is entitled to their views and to not support the Budget. But it will not stop me, as Finance Minister, from doing what is right, and it will not stop this government from continuing with all our efforts to build a better Singapore.”