SECOND READING SPEECH BY MR S ISWARAN, SENIOR MINISTER OF STATE FOR TRADE AND INDUSTRY ON TOURISM (CESS COLLECTION) (AMENDMENT) BILL 2008

Mr. Speaker, Sir, I beg to move, “That the Bill be now read a second time”.

Objective

Sir, during the Budget Speech in 2007, then-Second Minister for Finance announced the intent for cess to be used in the future in more targeted ways to fund specific tourism events.

In line with this, my Ministry is proposing to amend the Singapore Tourism (Cess Collection) Act to allow the imposition of cess to fund strategic tourism events. The staging of strategic tourism events in Singapore, such as the Formula One Grand Prix race, enhances Singapore’s global branding and brings significant economic benefits to the country. However, such events typically entail high staging costs. The Government can provide financial support commensurate with benefits to the broader economy to help defray some of the costs. But, it is not sustainable for Government to be the sole source of support for such events. We need the key beneficiaries of such events to also play a part in defraying these costs as they derive significant economic benefits from these events.

In particular, the tourism and hospitality sectors stand to benefit from the higher foreign visitor ship to Singapore arising from these events. This will translate into higher hotel occupancy and room rates, increased patronage of entertainment and retail establishments, and greater tourist spending. It is hence reasonable for such benefitting establishments to provide an equitable contribution in the form of cess to defray part of the high costs of staging strategic tourism events.

Let me now go through the major amendments proposed in the Bill.

Imposing cess to fund specific tourism events

Sir, currently, Sections 5 and 6 of the Singapore Tourism (Cess Collection) Act stipulate that tourist establishments are liable for cess on specified sales made or charges collected at a specified rate. To allow cess to be used in a more targeted way, Clause 3 of the Bill empowers the Minister to declare a tourism event where cess will be applied and the period for which cess shall be levied. The clause would also allow the Minister to specify the descriptions of sales or charges for which cess shall be paid, the tourist establishments upon which cess shall be levied and the rates at which cess shall be paid.

Changing incidence of cess on to tourist establishments

In addition, my Ministry proposes to repeal Section 7 in Clause 4 of the Bill to remove the provisions for the recovery of cess from consumers. Currently, tourist establishments may recover cess from their customers and in doing so, show the amount of cess paid on the sales receipts. With the amendment, the Singapore Tourism (Cess Collection) Act will reposition the incidence of cess on the specified tourist establishments, rather than on their customers. Tourist establishments can then price their products and services in accordance with prevailing market conditions. This is in line with the Government’s intent for the key beneficiaries of tourism events to make a contribution towards the cost of these events.

Allowing the Singapore Tourism Board to obtain information

Sir, the Singapore Tourism Board (STB) is currently empowered to obtain information under the Singapore Tourism (Cess Collection) Act for the purpose of ascertaining the amount of cess to be paid. Under the proposed approach of imposing cess for specific tourism events, the STB would need to advise my Ministry on the tourist establishments on which cess is applicable and the amount of cess to be paid by any person under the Act. Clauses 5, 6 and 7 of the Bill will allow the STB to obtain the information required to carry out this responsibility.

Improvement to the penalty structure

Clauses 8 and 9 of the Bill will strengthen the penalty framework in the Singapore Tourism (Cess Collection) Act to allow the STB to deal more effectively with non-compliance. The penalty for late or non-payment will increase the longer a person delays cess payment. Beyond the initial five percent penalty, any additional penalty is subject to a maximum of fifty percent of the amount of cess outstanding.

Conclusion

Mr. Speaker, Sir, the proposed amendments to the Singapore Tourism (Cess Collection) Act will enhance our ability to anchor strategic tourism events in Singapore, many of which come at a high staging cost. These tourism events will not only benefit the tourism sector and the economy at large, but will also enhance the profile of Singapore internationally and contribute to ongoing efforts to transform Singapore into a distinctive and vibrant global city. While Government can provide support commensurate with the benefits to the economy, it is essential for the success and sustainability of these tourism events that the key beneficiaries also play their part and help defray the high staging costs of such events.

Sir, I beg to move