The right thing or an own goal? MPs have their say in Parliament about GST hike

Shortly after Deputy Prime Minister (DPM) Lawrence Wong kicked off the second reading of the Goods and Services Tax (Amendment) Bill by announcing a boost to the Assurance Package, more than 15 Members of Parliament (MP) followed it up with a debate in Parliament today (Nov 7).

A common theme in their speeches? On whether the Government is “right” or “irresponsible” to proceed with the GST hike. 

Voicing his opposition to the GST increasing from seven to eight per cent next year and another percentage point in 2024, Workers’ Party Louis Chua questioned if there is an urgent need to do so.

The MP for Sengkang GRC told Parliament how Singapore’s core inflation that measures consumer prices had reached a 14-year high at 5.3 per cent in September.

Chua also questioned if the GST hike will “fan the flames of inflation” and “contribute an additional unnecessary one percentage point increase in the cost of living”. 

Echoing the Monetary Authority of Singapore’s remarks in October that the country’s core inflation next year will continue to stay high, he asked: “I am not much of a football person, but when your team is five-nil down, does it make sense to respond by scoring an own goal?”

To reduce the impact of inflation, DPM Wong shared earlier in Parliament today that the Government will top up the Assurance Package by another $1.4 billion to reach around $8 billion.

“The Government will help all Singaporeans adjust to the GST increase, especially the less well-off,” Wong, who is also Finance Minister said, while adding that more details on the enhancements will be announced in his Budget statement next year.

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But Chua asked if low-to-middle income households will be “on the hook” for the GST hike when the benefits of the Assurance Package wear off.

“Assurance packages are temporary, while a GST hike is forever,” he said.

‘Nobody is truly average’ 

His fellow party member Jamus Lim, on the other hand, called for essential goods and services to be temporarily exempted from the GST hike.

Describing how it is “irresponsible” for the Government to increase the GST amid the uncertain inflation outlook and higher prices, the Sengkang GRC MP said in Parliament: “In our walkabouts, incredulous residents have come up to me and asked, ‘how can inflation be only seven per cent, when my cai png has gone from $3 to $5, and my SP bill has doubled?’

“Herein lies the conundrum: Nobody is truly ‘average’, and so those who consume a narrower basket of goods and services will feel the pinch more acutely. This leaves many individuals and families feeling like the coupons, subsidies, and rebates fail to make up for the magnitude of the price increases that they face.”

Lim also shared his observations that essential goods and services have been subjected to the greatest price volatility in recent months.

“It is reasonable to offer temporary, targeted relief for these essentially non discretionary aspects of their spending,” he said.

Increasing GST ‘the right thing’

While MP Saktiandi Supaat (PAP-Bishan-Toa Payoh) is confident that the government would add to that Assurance Package support if the economic situation continues to worsen, he hoped that DPM Wong would clarify whether the GST hike would proceed even if there is a “deterioration of conditions”.

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“If the answer is that we should still proceed, then it must be implemented carefully,” Saktiandi said, adding that the most vulnerable should not be left behind.

The plan to increase GST is also a “good thing”, according to Saktiandi.

“It catches everyone, even tourists, who just stop by Singapore for a day or a week,” he said, adding that with the recovering tourism numbers, it makes the GST increase “an even more attractive revenue option”.

MP Liang Eng Hwa (PAP-Bukit Panjang), meanwhile, pointed out the “uniqueness” of the GST system where the low-income groups are largely “offsetted”, with the larger proportion of the GST raised from the higher-spending group.

Adding how there is a need for higher revenue to fund escalating expenditures including increasing the number of healthcare facilities, childcare and education needs, as well as funding for the various social and employment support, Liang said that he supports the Government’s approach to strengthen Singapore’s revenue sources.

“This Parliament must be about doing the right thing. And the right thing for us to do today is to secure our finances in a responsible way,” he said.

GST support package

Speaking to Parliament later in the day to round up the debate, DPM Wong addressed concerns from MPs on why the GST increase was going ahead as planned. 

While the inflation rates are unlikely to fall anytime soon, the resident unemployment rate has recovered to pre-pandemic levels, he said, adding that the Government had also rolled out support packages. 

This includes the GST Voucher scheme which helps lower to middle-income households defray a significant part of their GST expenses permanently, according to DPM Wong. 

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Alternative measures such as increasing other taxes are also not feasible as it could affect Singapore’s attractiveness to investors and businesses, 

DPM Wong said: ““We will not just go for politically expedient measures that may very well end up being unviable or unsustainable.

“Instead, we focus our efforts on designing effective policies to benefit all Singaporeans.”

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