Finance Minister Heng Swee Keat Emphasizes Importance of Rise of GST

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In a forum at Mediacorp held on February 21, just after the Budget Roll-out, Finance Minister Heng Swee Keat recognized that many are anxious about the increase in Goods and Services Tax (GST). However, he sought to address everyone’s concerns by emphasizing the importance of the GST increase, and is hoping that citizens are able to see the bigger picture of what is at stake.

The important purpose that Mr. Heng hopes that Singaporeans will comprehend is that these funds are needed for the rising expenses of the country itself.

Mr. Heng described the 2018 Budget as a “strategic and integrated financial plan to position Singapore for the future.” While the Budget’s concentration is toward challenges that are for the long term, it contains courses of action that are aimed specifically toward the society, economy, environment and also to preserve Singapore’s budgetary sustainability.

At Wednesday’s forum, many asked Mr. Heng about the GST increase of 7-9 percent, even if implementation will not occur until sometime around 2021 to 2025. The bulk of the questions centered around corresponding cost of living increases. On example of this is the possible increase of childcare expenses, and Mr. Heng was asked if there would be a rise in salaries as well.

The Finance Minister emphasized the need to understand why the government needs to implement the GST increase, since he had stated during the Budget Roll-out that security, infrastructure and healthcare continued to be financial priorities. Because of these, he said, “We’ll have to find new sources of revenue so that is what we started with. It is important to bear in mind that we are doing this for a very important purpose.”

When asked if the government has additional sources of income aside from higher taxes, Mr. Heng answered that the net investment returns contribution (NIRC) is now number one in contributing to government funds, higher than any collections from personal or corporate taxes. Since 2009, NIRC’s contribution has more than doubled in size. That year, it was S$7 billion, and for FY 2018, it is expected to be S$15.9 billion.

The government is allowed to spend as much as half of the long-term investment returns, under NIR’s framework. Introduced in 2008, the framework began as the reserves under management by the Monetary Authority of Singapore (MAS) and GIC, and then in 2015, Temasek Holdings were included.

Mr. Heng said that he is very thankful for this fund, and that the wants to make sure that it will be used for future generations as well. “As our economy grows, I hope that our reserves will also grow together with the economy and in that way, our younger people can have the same assurance that we inherited from our forefathers.”

Channel NewsAsia posed a question as to whether last year’s Budget surplus, which was larger than expected, actually made the GST increase less palatable and more difficult to convince citizens about. Mr. Heng agreed that the size of the surplus made explaining the GST harder to justify, however it is highly unlikely that this amount of surplus would be occur repeatedly.

The surplus for the last fiscal year is expected to be S$9.6 billion, an amount that grew because of the MAS’ “exceptional” statutory board contributions and bigger collections of stamp duty because property transactions have risen of late. However, the Finance Minister said that the MAS was able to contribute a higher amount only because of gains from fluctuations in the currency but in order to plan for the country’s future, “structural factors” must be considered carefully, including the projected increase of expenditure needs.

The Finance Minister also said that when the GST increase is implemented, efforts will be made to make sure that measures are put in place to ease burdens on lower and middle income families. This increase will also be timed with caution, with local and global economic environments will be carefully considered.

Mr. Heng says that if the economy faces a recession or financial crisis, recalculations will need to be done. But the 2 percentage point increase is appropriate for where the country is, since it means that a collection of 0.7 per cent of gross domestic product (GDP) in revenues annually. “I’m not saying that that itself will be sufficient (because) how our healthcare cost would grow, we cannot predict with certainty. But as far as the GST is concerned, looking at our current projections and trends, 2 percentage point is likely to be the right one.”

The Finance Minister also said that since businesses have been told of the GST increase well in advance, this should give them ample time to adjust appropriately.

Others have commented that it is a risk for the PAP to push for the GST increase. Three years ago, former Finance Minister Tharman Shanmugaratnam had said that the actions the government had taken were adequate to provide for greater expenditures until 2020. This was echoed on November 19, when Prime Minister Lee Hsien Loong said that the current government had sufficient revenue.

Mr. Heng did not dispute this. He said, “That remains correct based on the Government’s projections. If it were a wrong assessment, we would be prepared to say so but it is not. It is the correct assessment that we are in good position right until at least 2020 but beyond that, we know that there are so many new areas of expenditure that we will need. Therefore, it will be irresponsible if I do not state this clearly and plainly.”

When asked if this issue would be used against them in the next General Elections, the Finance Minister said that people in places of responsibility must act accordingly, and have the courage to continue do the right thing.

Netizens commented on the statement former Finance Minister Tharman Shanmugaratnam made in 2015.

Others offered suggestions for where the budget could be cut

Others challenged ministers to live like the poor do, or for ministers to receive a lower salary

Yet others felt that the Budget disregarded the needs fo poor Singaporeans

36 COMMENTS

  1. We let you yourself pay you so much to come up with if, if this bad things happened if that bad thing happens. I tot you are supposed to prevent those ifs

    • The only way to prevent PAP corruption and abuse is to get in more oppositions, for check and a balanced debate in parliament, so that the PAP cannot get to sign off their own cheque freely.
      Currently there are many wrongdoings that were let off and brushed aside in parliament without proper debate and accountability. Just look at the good joke in Oxley drive.

  2. ‘Recalculations’ will be done too if the proposed GST hike becomes one of the major issues taken up by the opposition parties in the run-up to the next GE.

  3. Lets be fair to Mr Heng and all ministers. Please remember that without all the voters support, they don’t be there. They are doing what voters voted for. Sorry if you happen to be the 30%. Just suck thumb like me lo.

    • I thk the electn result was a scam. Do u seriously believe something as monumental they wld leave to chance and roll of dice? .. when everything else is at their disposal..

    • The only way to prevent PAP corruption and abuse is to get in more oppositions, for check and a balanced debate in parliament, so that the PAP cannot get to sign off their own cheque freely.
      Currently there are many wrongdoings that were let off and brushed aside in parliament without proper debate and accountability. Just look at the good joke in Oxley drive.

    • With all the election gerrymandering, it’s not a fair election in the first place. They cheated and changed the rules to their advantage and keep out oppositions, resulting in an opposition number in parliament that is not representative of the proportion of voters.
      Many are hoodwinked by PAP wayangs and lies.
      You must be stupid to talk about fairness to evil cheaters.

    • They should not be given any more chances to make threats. Kick them all out, remove PAP government. Now is already bad enough. Singapore needs a fresh approach.

  4. Again I say to the media, please have an in-depth analysis. Otherwise, you are a proxy punching bag for the unhappy people. Rise up to be like the independent publications of think tank, rather than like the news generating arm – similar to the 5 mao who worked for PLA. In other words, don’t get involved in misinformation …..

  5. As usual don’t disclosed enough info and once decided always have tonnes of excuses available trying to fan off criticisms!!! Please be most transparent and responsible to the citizens of Singapore and they’re not the same as those in the 1960s era I’m sure they’ll like to know why rather than hearing the same old
    Excuses where no one neither agree with Nor accept!!! Please please please!!!

  6. Mr Heng, please also do on the recalculation on others like CPF.

    Every year keep increasing minimum cap, but CPF interest rate had maintain for the past 8years. This also need a Major Recalculation

  7. Since the 2% increment accounts for only 0.7% of GDP, then dun increase lor.
    Increase entrance fee for casinos lor, increase gaming tax lor, make foreigners/tourists pay entrance fee lor.
    Why u always good at putting pressure back at Singaporeans?

  8. Our country has lots of surpluses, casino make $34 billions and continue making profits, polyclinic makes millions, eldershield insurance make $2.5 billions, yet these greedy white monkeys still say money not enough!
    GST should be abolished as the poor senior unemployed citizens with medical issues still have to pay 29 layers of tax! How to keep fit and healthy without enough money to eat nutritious food!
    Yesterday, I discover my unemployed brother with medical issues buying canned food and he gave up on TCM MEDICINE because he couldn’t afford!
    Why make the poor pay 29 layers of kueh lapis taxes when our country has surplus!
    Dr Goh Keng Swee set up the reserve funds for his next generation, which is our current generation of senior citizens!
    Time for all citizens of Singapore regardless of whether you are imported new converted citizens to vote for SDP and WP in the coming GE2019 so as to abolish GST system

  9. Come GE 2020/21, Singaporeans should vote for or against Increase in GST .

    Today’s government didn’t tell Singaporeans what is the current size of the national reserves, but keep on stressing importance of GST increase. Lack of transparency is the best way to describe today’s government.

      • Such PAP “for the poor” catchy reasons are for dafts as many never think beyond that. The evil is that it preyed on dafts kindness and trust.

        Dafts must learn not to have blind faith and blind trust. The almighty already sent KongHee lesson to warn you and roped in a PAP MP into the lesson. The signs are very clear already.

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