Against the backdrop of a rapidly ageing population and the shift towards greater social spending, the Government cannot rule out further refining, over the next five to 10 years, the tax system and the basis for drawing on the country's net investment returns.
That is why it still does not intend to bring into effect Article 5(2A) of the Constitution, Law Minister K. Shanmugam said yesterday in response to Nominated MP Eugene Tan.
The article states that if Parliament wants to amend certain elements of the Constitution, such as any provisions relating to the President's powers, it must be supported by at least two-thirds of voters in a national referendum.
The article has not been brought into force since the Constitution was amended in 1991 to establish the Elected Presidency.
Mr Shanmugam said the "complex and novel" nature of the changes that came along with the Elected Presidency meant that its provisions had to be revised and fine-tuned along the way. Such refinements must be put in place and fully ironed out before the scheme can be safely entrenched.
"To bring Article 5(2A) into force before that would otherwise potentially trigger a national referendum each time we needed to make a further refinement or adjustment," he said. "We should give ourselves more time before entrenching the provisions."
Mr Shanmugam said the Constitution had been further amended in 2008 to introduce a new Net Investment Returns framework.
Currently, the Net Investment Returns Contribution makes a "substantial contribution" of about $8 billion a year - some 2 per cent of the gross domestic product - to the Budget. However, the Government will need to strengthen its revenue base to support the demographic and policy changes in the years ahead, said Mr Shanmugam.
Close to a million Singaporeans will reach retirement age in the next 20 years or so, while the Government has made major policy shifts that will significantly increase spending on infrastructure and social services, he added.
Health-care spending alone is projected to increase threefold to about $12 billion by 2020. Hence, the Government cannot rule out changing the tax system and the rules that govern the use of net investment returns. "We cannot decide today precisely how this should be done," said Mr Shanmugam. The Government must preserve its ability to make necessary adjustments so it can maintain Singapore's strong financial position, and a fair and progressive tax and transfers system.
Associate Professor Tan also repeated former Nominated MP Thio Li-ann's previous call for the Government to bring into effect two provisions of Article 5(2A) relating to fundamental liberties and general elections.
But Mr Shanmugam reiterated that the Government cannot do so. Article 5(2A) cannot be implemented in a staggered fashion as it would go against the intent that it should operate as a package.
This article was first published on July 10, 2014.
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