(Delivered in Parliament on 9 July 2018)
Mr Speaker Sir, tourism is a major industry that has not only knock-off effects for local businesses, but also for our city branding and international reputation. We have done well in many aspects, especially in urban and heritage conservation to make Singapore a unique destination with an old world colonial port city charm. Balancing this, we have also become a global city of choice for meetings, conventions and events with iconic developments such as Marina Bay and signature events such as the Formula One night race.
The Cess Act has been closely tied with Formula One. The Act was last amended in August 2008, just months before the inaugural F1 race. It was changed from a consumption tax to a business tax to be used in a targeted manner to fund strategic tourist events. Cess collection has been limited to hotels benefiting from the F1 race.
With this amendment bill, it looks like the last ten years of taxing hotels to fund the F1 race was a successful experiment to see whether such a tax was viable to fund a tourist event and would not hamper the growth of tourism. Could the Government give greater details of the results of the experiment? How much cess was collected in the last ten years compared to the expenditure of co-funding the F1? What has been the principle involved in identifying which hotels pay cess for F1? Why has cess collection not been extended to tourist food establishments and public houses?
At this point, I would like to sound a caution on over-expansion of cess collection, though the Government has allayed fears by saying that there are no immediate plans to do so. Even with F1, expanding cess collection beyond hotels will have to be done in a judicious manner so as to not inadvertently hurt local businesses. It may be trickier, for example, to identify using geographical markers tourist food establishments that are benefitting specially from F1, especially when many establishments actually make losses during the event due to road closures.
The other question I have for this amendment bill is, where does the collected cess go? Since the cess collection is very targeted and the specified aim for cess collection is to fund strategic tourist events, there is a case for ring-fencing the collected cess to further the national interest of tourist development. I would like to suggest that the collected cess be directly deposited into the Tourism Development Fund.
Some quarters among the public have been critical of F1 as an exclusive event enjoyed by the global and local elites. In order to allay this perception, we need to show more tangible benefits arising from the event, spread the proceeds from the event to the sector as a whole. Having the collected cess go directly into the Tourism Development Fund may be just symbolic in the end, since I suspect Government funding of the event exceeded the proceeds, but it sends an important signal to the public.
More than it being symbolic, we could also do something for retail businesses affected by the road closures and traffic redirection linked to F1, and in the future, other tourist mega-events. We could have a special innovation and marketing scheme under the Tourism Development Fund that targets affected retail businesses to see how they can reinvent themselves for the tourist visitors and market themselvesduring the special event.
Mr Speaker Sir, with major strategic tourist events such as the F1 that involve high costs and extraordinary traffic control measures, there will be winners and losers, and critics who fail to see any tangible benefits. The role of the Government would be to make sure the winnings are more equitably distributed. Tourism cess collection is a good instrument in this respect and I support the amendments in this bill. But we need to address perceptions and mitigate the inadvertent losses suffered by the losers. To this end, tying the cess collection more directly to the Tourism Development Fund could kill many birds with one stone. Thank you.