Introduction
Mr Speaker, as I was preparing my speech for the budget debates for this year, I can’t help but feel a sense of déjà vu as I revisited the speech I gave last year. Our national coffers are fuller than ever, yet the structural burdens on the average Singaporean household remain stubbornly heavy. There are many recurring themes and issues that continue to be not just relevant but also increasingly pressing for Singapore and Singaporeans, and I sincerely hope that the Prime Minister and Minister for Finance can seriously consider my suggestions for the current term.
Observations on our fiscal position
Mr Speaker, the recent revelation regarding our fiscal position for FY2025 warrants serious scrutiny. The projected surplus of S$15.1 billion, more than double the earlier estimate of S$6.8 billion, is a stark reminder of a recurring pattern. This is not an isolated incident, and as I highlighted in my Budget 2025 speech, higher-than-expected surpluses have been a consistent feature of our public finances since at least 2021, often following initial estimates of deficits.
This persistent issue of fiscal marksmanship raises fundamental questions. Is the Government consistently taking more from the economy than it truly needs? And what are the implications of this for our private sector? When a government persistently runs a budget surplus, it is effectively withdrawing liquidity from the economy and reducing the net savings of households and businesses. Persistent government surpluses are, by definition, private sector deficits.
While the Government may argue that these surpluses are necessary for long-term planning and unforeseen contingencies, the sheer magnitude and regularity of these upward revisions suggest a systemic issue. It begs the question of whether the urgency behind tax increases, such as the GST hike, was truly justified when the state consistently finds itself with significantly more resources than initially projected. And by the way, when announced in 2022, the GST hike was projected to bring about S$3.5 billion annually when the full hike is in place in 2024. GST revenue was initially estimated at S$12.8 billion in Budget 2022. This year, GST revenue is estimated at S$22.3 billion. An almost S$10 billion increase!
And let us also not forget that Singapore’s way of accounting differs from international norms, such as that of the International Monetary Fund (IMF). The most notable of which is the exclusion of land sale proceeds, amounting to $20.8 billion in FY2025 and estimated at $21.2 billion in FY2026. Including these receipts would reveal a much larger fiscal surplus, reinforcing the argument that the Government is extracting more resources from the economy than is necessary at this time.
Structural changes vs. one-off handouts
In the face of these record surpluses, the Government’s primary response remains a reliance on one-off handouts and ad-hoc vouchers. As I have argued previously, we need better structural levers that automatically adjust to reflect the economic realities Singaporeans face, instead of uncertain one-off handouts that may or may not be renewed every year. Let me briefly recap the measures that I have proposed in my Finance Bill speech from November 2025.
The personal income tax (PIT) brackets in Singapore have not been updated for over 24 years. Since 2001, nominal wages and the cost of living have risen significantly, leading to "bracket creep," where taxpayers are pushed into higher marginal tax brackets even if their real purchasing power has stagnated. The Earned Income Relief (EIR) is another example of a structural feature that is long overdue for adjustment. The relief for workers under 55 has remained at S$1,000 for many years. Worse still, the personal income tax rebates from the last two years were discontinued in Budget 2026.
PM Wong spoke in length about AI and in an era where AI is recognized as a critical driver of economic transformation, it is incongruous that personal expenditure on AI-related tools and education does not receive the same tax relief consideration as corporate AI investments. If we are serious about fostering a future-ready workforce, we must incentivise individual upskilling and adoption of new technologies through our tax policies. As I shared last year, it would be wise for us to introduce a broad-based “Skills Investment Relief”, allowing individuals to claim a capped deduction for out-of-pocket training expenses. This would be an expansion of the existing Course Fees Relief, which only provides relief for specific approved academic, professional or vocational qualification.
Similarly, for businesses, particularly Small and Medium Enterprises (SMEs), the current system of fluctuating corporate income tax rebates, varying from 20% to 50% over the last decade, lacks the certainty and predictability needed for long-term planning. To underscore my point, the corporate income tax rebate for Budget 2026 was reduced to 40%, compared to 50% for 2024 and 2025.
Ironically, in the face of BEPS2.0, the concessionary corporate income tax rates for approved global trading companies of as low as 5% on income from qualifying transactions in qualifying commodities was extended from 2016 to 2031.
We should embed the same level if not higher level of stability into our personal and corporate income tax regime, moving away from discretionary rebates towards a more transparent and consistent framework that truly supports our local Singaporean base.
Addressing wealth inequality head on
Next, let me touch on two major issues I believe were missing from the strategic focus of Budget 2026, the first of which is the issue of wealth inequality. As I have shared in my budget speech last year, I believe the deepest divisions in our society today are not based on race, language or religion, but based on socio-economic status (SES) which is closely tied to wealth inequality. If we do not take a concerted effort to address this issue head on as we have done with race and religion, these divisions will only deepen.
I was initially hopeful, when the recently released Ministry of Finance (MOF) Occasional Paper on "Income Growth, Inequality, and Social Mobility Trends in Singapore" was published on 9th February, ahead of PM Wong’s budget statement. This paper provided the first-ever public release of Singapore's wealth data, which revealed that Singapore's wealth inequality, with a Gini coefficient of 0.55, exceeds income inequality. Unsurprisingly, to the extent that wealth at the top of the distribution is under-reported, measured wealth inequality is likely to be underestimated. While the paper notes broad-based improvements in income mobility, it also highlights a "gradual moderation" in social mobility as our economy matures. This data underscores the urgency of implementing robust measures to address wealth disparities.
I reiterate my proposal from my Budget 2023 speech for a Net Annual Value (NAV) tax on properties to be reinstated, particularly targeting high-end properties such as Good Class Bungalows or those who own secondary residences. Property is already a preferred means by the government to tax wealth, such as via progressive property taxes and stamp duties. Bringing back the NAV tax would serve as an effective complement to our system of taxing wealth, ensuring that those who benefit most from our economic growth contribute proportionally to our collective well-being.
Furthermore, we must seriously consider bringing back estate duty, which was abolished in 2008. As with the estate duty pre-2008, exemption thresholds can be set such that only those who are truly wealthy. For example, the exemption threshold for dwelling houses was set at S$9 million from 1996 to 2008, and an updated threshold adjusted for inflation can be determined as with other asset classes.
The OECD’s 2021 report titled ‘Inheritance Taxation in OECD Countries’ states that and I quote, “an inheritance tax, particularly one that targets relatively high levels of wealth transfers, can be an important tool to enhance equality of opportunity and reduce wealth concentration. The case for inheritance taxes might be strongest where the effective taxation of personal capital income and wealth tends to be low”. As we all know, there is no capital gains nor dividend taxes in Singapore.
The challenge with taxing wealth via property tax, stamp duty, and motor vehicle-related taxes is that the middle-income and upper-middle-income groups end up suffering too.
Consider the recent changes to the Preferential Additional Registration Fee (PARF) rebates in Budget 2026, which saw a 45 percentage point cut and a cap reduction to $30,000. I had welcomed the Government’s move in 2023 to further adjust the ARF and cap the Preferential ARF rebates at $60,000. This time round however, while ostensibly aimed at luxury cars, the impact of the PARF changes is felt across the spectrum. A BMW 5-series listed for around $370,000 will see its PARF rebate slashed from around $40,000 to $4,000. But even an entry-level Suzuki Swift, which is one of the cheapest cars in Singapore at around $152,000, will see its PARF rebate slashed from around $6,600 to $660, resulting in an increase to its annual depreciation to around $15,000.
This demonstrates how policies intended to target the affluent can still impact the middle-income segment, while the truly wealthy, like those who rent high-end properties, remain largely unaffected. We must ensure our tax policies are truly progressive and do not inadvertently burden the middle class.
We should therefore also study wealth tax issues in other nations, such as Norway and Switzerland. The Government might point to Norway as a cautionary tale, claiming that the increase in the rate of wealth taxes had resulted in an exodus of wealth. Ironically, many of the wealthy turned to Switzerland, which has a wealth tax instead of other jurisdictions without a wealth tax.
The Swiss model, with its "Forfait Fiscal" or lump-sum taxation based on lifestyle expenditure or a multiple of living expenses, offers an interesting alternative to traditional wealth taxes based solely on asset valuation. This approach could be explored to ensure that those who benefit most from Singapore's security and conducive environment contribute their fair share, even if their declared income or assets are difficult to fully ascertain.
Some may argue against wealth taxes, citing fears of capital flight. However, Singapore's unique value proposition, similar to Switzerland, remains a powerful draw for global talent and capital. Many wealthy individuals would still prefer to reside and operate here, especially in the context of what PM Wong said about the weakening of the multilateral system, where countries everywhere have less confidence that common rules will protect their interests.
Acting with clarity and resolve: to address our TFR
Finally, let me touch on the second major issue which I believe is missing from the strategic focus of Budget 2026, that is our record low Total Fertility Rate or TFR.
If we can establish an AI Council to provide strategic direction and to drive Singapore’s AI agenda, where is the equivalent council or dedicated, high-level focus to act with clarity and resolve on our existential demographic challenge? Our Total Fertility Rate (TFR) fell below 1.0 in 2023 and remained there in 2024, a trajectory that poses a profound threat to our long-term sustainability.
The truth we must confront is whether the Government is genuinely committed to structural solutions for our fertility crisis, or whether it is increasingly leaning on immigration as an easier way out. At the recent Institute of Policy Studies (IPS) Singapore Perspectives 2026 conference, Acting Minister Jeffrey Siow described our TFR of 0.97 as "abysmal" but simultaneously argued that "we need to do more with integration so that we can do more immigration".
Mr Speaker there is no denying that the vibrant fabric of Singaporean society is largely woven by immigrants, and this is something that we must cherish and continue to uphold. However, I also believe that the Government must do more to nurture a fertile environment for parents to grow their families.
Instead of taking this path of least resistance, we must be bold and innovative in our approach to raising out TFR. I wish to draw attention to Hungary's aggressive pro-natalist policies, which offer a case study in comprehensive, albeit sometimes controversial interventions where its TFR rose meaningfully from around 1.2 in 2011 to 1.6 in 2020. While some may point out that Hungary’s TFR declined to 1.39 in 2024, arguably, macroeconomic factors may also have a significant role to play.
The point here is this, Hungary is fully exempting mothers with three children from paying personal income tax, regardless of age, and starting this year, even mothers under 30 with at least one child will be fully exempt. Are we willing to be this bold in our approach, and exempt all mothers from personal income taxes for life?
For sure, money is not the be all and end all when it comes to having children. But according to a 2024 NTU survey of 230 young Singaporeans, financial considerations were raised by 70% of respondents as the reason why they do not wish to have children. This reason was also mentioned by the majority of married respondents to 2021’s Marriage and Parenthood survey as the biggest hurdle that prevents them from having children.
As part of this year’s Budget package, the household income ceiling for childcare subsidies was increased from $12,000 to $15,000, while families with children below 12 years old will receive $500 in LifeSG credits. However, given that parenthood is a massive undertaking that lasts decades, I believe that more can be done across the spectrum.
As of the 2020 Census, 53% of married couples were dual-income. While not all dual-income couples have children, those who have often need to balance both their parenting and work duties. Hence, I have previously suggested that the Government implement the statutory right to request for flexible work arrangements, as well as increase statutory childcare leave.
Moreover, the caregiving burden is often unequally shared as the odds are usually stacked against the mother’s favour. Recent Nobel Prize-winning economist Claudia Goldin observed that this “Motherhood Penalty” usually arises from mothers halting their careers right after childbirth, and as their child gets older, they would turn to jobs that offer greater flexibility but lesser pay. Hence, our policies should aim to recalibrate this imbalance, such as via tax incentives.
Even if the government does not wish to take the Hungarian approach, the least we can do is not make mothers pay more taxes, and as I have shared on many occasions in this house, I hope that the Government would revert back to the previous iteration of the WMCR, which is applicable only to mothers with children born before 2024. While there could be a small group of lower income working mothers who would benefit from this change, the majority of would-be working mothers will be worse off with the change in methodology. For lower income working mothers, a tax rebate can be given, and if the tax rebates granted exceed the tax payable, tax credits can be paid out in cash to ensure the reliefs are not lost. Moreover, single mothers are not eligible for the WMCR, and even if we cannot raise their children on their behalf, the least we can do is to ensure that our tax policies do not discriminate against them.
The bottom-line is that structural issues to our low TFR such as work-life balance, societal expectations, and the high cost of raising children must be comprehensively addressed. We must learn from international experiences and our own experiences to further tailor our policies to our unique context, ensuring that we create an environment where Singaporeans truly feel supported and confident in starting and raising families.
Conclusion
议长先生，我今天的发言聚焦于 2026 年财政预算案中四个急需关注的领域:
首先，是财政预测精准度不足（Fiscal Marksmanship）的长期问题。政府持续性地超额征收税收，让我们不得不质疑调高税率的必要性，以及这对国人造成的冲击。2025年的预计盈余高达 151 亿，是最初估算 68 亿的两倍多。这种“年年多收”的模式已成常态，而非偶然。回顾 2022 年，政府预测消费税全面调高后，每年将增加约 35 亿的收入。当时估算的 GST 总收入为 128 亿，而今年，这一数字预计将飙升至 223 亿，增幅接近 100 亿！
其次，我们必须优先考虑税务结构性改革，而非年复一年地依赖一次性措施。这包括根据通货膨胀调整个人所得税税率级分并更新各项税务减免。
第三，解决财富不平等已刻不容缓，财政部最近的专题报告也强调了这一挑战。我们需要采取大胆措施，如重新引入净年值（NAV）税、重新考虑遗产税，并探索瑞士等国的创新财富税模式。我们不能因为担心“超级富豪撤资跑了”，就让那些落地生根“跑不了”的中产阶级承担不成比例的重担，让他们成为财富鸿沟下的牺牲品。
最后，我们必须以应对人工智能等经济挑战同等的紧迫感，来面对极低的生育率挑战。借鉴国际经验，我们必须制定全面且结构性的解决方案，赋予新加坡人建立家庭的底气和能力。
政府可能会辩称这些举措风险过高，或者我们必须保持保守的态度。但我反问：究竟什么才是更大的风险？是从我们破纪录的盈余中少收几个百分点的税，还是任由国家的人口根基日益枯萎，任由财富集中在极少数人手中，而让中产阶级的新加坡人来买单呢？
让我们建立一个更公平、坚韧且可持续的社会契约。谢谢。
