SINGAPORE – The impact of the goods and services tax (GST) hike will be delayed for the majority of households in Singapore, and the date the rise takes place is not when Singaporeans will feel its impact, Second Minister for Finance Indranee Rajah told Parliament on Tuesday (Jan 11).
Amid global inflationary pressures, the Government has been shielding Singaporeans from the full impact of rising prices and will continue to do so, she added.
And as it prepares for the upcoming Budget, priority will be given to helping Singaporeans cope with the cost of living. The scope of household support measures is also being reviewed, she said.
The minister was responding to questions from several MPs on rising costs and the impending GST hike of 2 percentage points, from 7 per cent to 9 per cent.
Rising inflation around the world has pushed up the cost of groceries and utilities bills, and Mr Liang Eng Hwa (Bukit Panjang) asked if the expected GST hike can be delayed in the light of inflation.
Ms Indranee said the increase in GST is not something that can be put off forever.
First announced in 2018, the rise is meant to help Singapore meet rising recurrent spending needs, especially in healthcare and social support.
“In deciding the timing for the GST hike, we are carefully considering the overall economic conditions. The economy is recovering steadily and, barring fresh disruptions, it should grow in step with global economic recovery,” said the minister, adding that gross domestic product is expected to grow by 3 per cent to 5 per cent this year.
But Ms Indranee pointed out that the date the GST hike takes effect is not the same as the date that the impact of the hike will be felt.
Irrespective of when the GST goes up, the Government will be able to delay its impact on Singaporeans through the Assurance Package, she added.
The $6 billion Assurance Package, which has already been set aside, will stave off the impact of the hike by five years for the majority of Singaporeans, and by 10 years for the lower-income groups, said Ms Indranee.
“Essentially, whatever the increase to their expenditure as a result of GST, the Assurance Package is designed to buffer them for that increase. The Government is directly supplementing them so that they won’t feel the impact,” she added.
The Government will continue to look out for low-income households and the majority of middle-income households, she said.
Ms Indranee said the GST and the income and wealth taxes are important revenue sources for the Government, which will ensure the overall system of taxes and transfers remains fair and progressive.
“We need sound fiscal foundations, not just to provide support to households and businesses when needed, but also to meet our collective aspirations – affordable healthcare, quality education, and a safe and secure home – in a responsible and sustainable way,” she added.