Debated in Parliament on 29 Nov 2022.
The following question stood in the name of Mr Chua Kheng Wee Louis –
To ask the Deputy Prime Minister and Minister for Finance (a) whether the Government has considered implementing windfall taxes on energy companies in light of record profits by oil majors; and (b) what are the considerations behind implementing or not implementing such a tax.
Question No 18.
Mr Speaker, in light of elevated global oil and gas prices over the past year, some countries have introduced windfall taxes on the profits of energy companies. Such taxes can yield short-term revenues. But they will damage the economy in the longer-term.
In particular, it is typical for energy markets to experience up and down cycles. Higher profits in good years help the energy companies smooth out past losses and prepare for future downcycles. Windfall taxes arbitrarily applied to companies just because of their recent “record profits” will lead to considerable business uncertainty and disincentivise long-term private investments. Energy companies will hold back on investing in greener fuels and decarbonisation measures, which will make it harder for us to achieve our net-zero targets.
Sir, more generally, Singapore’s value proposition as a trusted business hub has been based on our long-term stability, anchored on strong rule of law and a predictable regulatory environment. Arbitrary measures like windfall taxes will send the wrong signal to businesses and discourage them from investing in Singapore. This will erode investor confidence and, in turn, affect Singapore’s competitiveness and the livelihoods of our workers, who could either lose their jobs or have fewer career advancement opportunities when businesses divert their investments elsewhere.
We must not let the temptation of short-term revenue gains come at the expense of our long-term economic competitiveness. We must be careful not to resort to populist ideas to raise revenue that will ultimately hurt businesses, hurt our economy and hurt Singaporeans.
Order. End of Question Time. The Clerk will now proceed to read the Orders of the Day.
[ Pursuant to Standing Order No 22(3), Written Answers to Question Nos 20, 23-30, 33-44, 46-47, 49, and 51-52 on the Order Paper are reproduced in the Appendix. The remaining Questions have been postponed to a later Sitting of Parliament or withdrawn.]
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