SINGAPORE: The Government will have to start moving on the planned hike in Goods and Services Tax (GST) in Budget 2022 , given that the economy is emerging from COVID-19, said Prime Minister Lee Hsien Loong in his New Year message on Friday (Dec 31).
The Government must have reliable and adequate revenues to carry out its social programmes, said Mr Lee, adding that additional revenues are needed to fund the expansion of the healthcare system and support schemes for older Singaporeans.
“Those who are better off should contribute a larger share, but everyone needs to shoulder at least a small part of the burden,” he said.
“This is the rationale for raising a broad-based tax like the GST, coupled with a comprehensive scheme of offsets to cushion the impact on lower-income households.
“The GST forms one important component of our system of taxes and transfers that also includes income and wealth taxes. Overall, our system will remain progressive and fair,” he added.
“We have seen this need coming for some years. Now that our economy is emerging from COVID-19, we have to start moving on this. Budget 2022 will therefore lay the basis for sound and sustainable government finances for the next stage of Singapore’s development.”
The plan to raise the GST by two percentage points, from 7 per cent to 9 per cent, was first announced in 2018 during then-Finance Minister Heng Swee Keat’s Budget speech. He said the increase would be necessary to strengthen Singapore’s revenues, given recurrent increases in healthcare, security and other social spending.
“The responsible way to pay for them is through taxation so that every generation pays its share. We should not borrow for recurrent spending, because that will put the burden of recurrent spending on future generations,” Mr Heng said in 2018.
“This GST increase is necessary because even after exploring various options to manage our future expenditures through prudent spending, saving and borrowing for infrastructure, there is still a gap,” he added.
“Increasing GST by two percentage points will provide us with revenue of almost 0.7 per cent of GDP per year.”
Mr Heng said then that the hike would take place sometime from 2021 to 2025 – earlier rather than later in the period - with the exact timing to be decided based on factors such as the state of the economy.
Given the impact of COVID-19 on the economy, Mr Heng said last year that the increase would not take place in 2021.
He reiterated, however, that the hike would be implemented “sooner rather than later”, between 2022 and 2025.
“Without the GST rate increase, we will not be able to meet our rising recurrent needs, in particular healthcare spending,” Mr Heng said in his 2021 Budget speech.
Mr Heng, who is also Deputy Prime Minister, previously announced that GST on publicly subsidised education and healthcare will continue to be fully absorbed.
Lower- and middle-income households can also get support from the permanent GST Voucher scheme, which will be enhanced when the new GST rate takes effect.
Singapore’s Budget 2022 will be unveiled by Finance Minister Lawrence Wong on Feb 18.
Continue reading...
The Government must have reliable and adequate revenues to carry out its social programmes, said Mr Lee, adding that additional revenues are needed to fund the expansion of the healthcare system and support schemes for older Singaporeans.
“Those who are better off should contribute a larger share, but everyone needs to shoulder at least a small part of the burden,” he said.
“This is the rationale for raising a broad-based tax like the GST, coupled with a comprehensive scheme of offsets to cushion the impact on lower-income households.
“The GST forms one important component of our system of taxes and transfers that also includes income and wealth taxes. Overall, our system will remain progressive and fair,” he added.
“We have seen this need coming for some years. Now that our economy is emerging from COVID-19, we have to start moving on this. Budget 2022 will therefore lay the basis for sound and sustainable government finances for the next stage of Singapore’s development.”
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The plan to raise the GST by two percentage points, from 7 per cent to 9 per cent, was first announced in 2018 during then-Finance Minister Heng Swee Keat’s Budget speech. He said the increase would be necessary to strengthen Singapore’s revenues, given recurrent increases in healthcare, security and other social spending.
“The responsible way to pay for them is through taxation so that every generation pays its share. We should not borrow for recurrent spending, because that will put the burden of recurrent spending on future generations,” Mr Heng said in 2018.
“This GST increase is necessary because even after exploring various options to manage our future expenditures through prudent spending, saving and borrowing for infrastructure, there is still a gap,” he added.
“Increasing GST by two percentage points will provide us with revenue of almost 0.7 per cent of GDP per year.”
Mr Heng said then that the hike would take place sometime from 2021 to 2025 – earlier rather than later in the period - with the exact timing to be decided based on factors such as the state of the economy.
Given the impact of COVID-19 on the economy, Mr Heng said last year that the increase would not take place in 2021.
He reiterated, however, that the hike would be implemented “sooner rather than later”, between 2022 and 2025.
“Without the GST rate increase, we will not be able to meet our rising recurrent needs, in particular healthcare spending,” Mr Heng said in his 2021 Budget speech.
Mr Heng, who is also Deputy Prime Minister, previously announced that GST on publicly subsidised education and healthcare will continue to be fully absorbed.
Lower- and middle-income households can also get support from the permanent GST Voucher scheme, which will be enhanced when the new GST rate takes effect.
Singapore’s Budget 2022 will be unveiled by Finance Minister Lawrence Wong on Feb 18.
Continue reading...