2.2 Operating Revenue
Assuming GDP growth of 4.5% to 6.5% in 2007, Operating Revenue for FY2007 is projected
at $32.4 billion, an increase of $2.4 billion or 7.9% over the revised FY2006 estimates.
FY2007 Operating Revenue is expected to be 14.4% of GDP, marginally higher than 14.2%
of GDP in FY2006.
Corporate Income Tax (CIT)
CIT collections are expected to grow by only 1.9% (or $0.2 billion) from the revised FY2006
estimates to $8.4 billion in FY2007. While sustained strong economic growth in 2006 and
2007 is expected to boost corporate revenues, profits could be weighed down by higher
compensation for factor inputs, with office rental and wages increasing appreciably in 2006.
The cut in CIT rate from YA2008 to 18% and the increase in Partial Tax Exemption threshold
from $100,000 to $300,000 are also both expected to dent collections in FY2007.
Personal Income Tax (PIT)
PIT collections are expected to grow by 10.2% (or $0.5 billion) to $5.2 billion. Although the
top PIT rate for YA2007 was cut from 21% to 20%, strong GDP growth in 2005 has boosted
wage levels in 2006 with a lag, thereby increasing the PIT base and expected collections.
Goods and Services Tax (GST)
GST collections are expected to increase by 23.4% to $4.9 billion in FY2007, arising from
the effect of the 2% increase in the GST rate for part of the FY, and a boost in consumption
fuelled by the GST offset measures.
Motor Vehicle Related Revenues
With the eventual exhaustion of the stock of cars with high claimable rebates, FY2007
collections for Motor Vehicle Taxes and Vehicle Quota Premiums are expected to rise to
$1.7 billion and $0.3 billion respectively, inclusive of the announced changes in road tax in
FY2007.