GST hike responsible way to fund spending needs: Heng

WP votes against Budget, the first time in three decades, following heated debate

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Yasmine Yahya

Windfalls and one-off gains – like the ones that led to the unexpected Budget surplus of $9.6 billion in the last financial year – cannot form the basis of prudent fiscal policy, Finance Minister Heng Swee Keat said yesterday.

That is why the goods and services tax (GST), a broad-based tax, has to be raised – to fund expenses in healthcare, education and security long into the future, he said. Given Singapore’s ageing population and the need to counter the terror threat, this spending is likely to recur year after year.

“The responsible way for us to fund such spending is to raise taxes. As Dr Lee Bee Wah pithily reminded us, you don’t fund recurrent spending needs by hoping to strike 4D,” said Mr Heng.

But the GST issue provided unexpected drama, with the Workers’ Party (WP) saying it could not support a future hike without more information. For the first time in three decades, it cast its votes against the national Budget.

This came after WP chairman Sylvia Lim (Aljunied GRC) initially said the party intended to support the Budget when the vote was called, but not the announcement of a GST hike to take place some time between 2021 and 2025.

But Mr Heng made it clear that the Budget presented the Government’s overall financial policy – both spending and financing options, including the GST increase.

INFORMATION NOT AVAILABLE

I think it is ridiculous for the Government to expect us, as a responsible party, to support something where all the information is still not available and we don’t have a crystal ball.

MS SYLVIA LIM, on why the WP cannot support the GST hike, to take place some time between 2021 and 2025.

SQUARE YOUR POSITION

You must square your position. Do you accept all that we said, that we do need to spend more, whether it is on pre-schools, SkillsFuture, healthcare, the economy, security? And if you do, then tell me how much is it going to cost and how we are going to even fund a fraction of what you have suggested (that the Government do over the last two days)?

MR HENG SWEE KEAT, on the WP’s stance.

He called on the WP to “square” its position. Mr Heng said: “Do you support all those increased spending? Or are you contradicting all your MPs’ position yesterday where everyone spoke about doing more? Where is the money going to come from, and would a 2 percentage point increase help us in some ways?”

Ms Lim responded tersely: “To make it clear, we are unable to support the announcement on the GST hike.”

The eight WP MPs present yesterday proceeded to vote “no” when a division – a formal recording of votes – was called.

To MPs who questioned the need for a GST hike despite the large Budget surplus, Mr Heng said it was largely due to one-off, exceptional factors. “We cannot fund our plans to secure Singapore’s future on the basis of episodic windfalls,” he said.

Instead, the only sustainable way to finance this was to raise taxes, he said. And a broad-based tax like the GST was deemed the most suitable.

Mr Heng reiterated that this hike would not cover expenditure needs, but would only make the fiscal gap more manageable.

On other financing options, he said the wealthy are already being taxed more, as are buyers of more expensive property.

Drawing on the reserves would not be responsible, he said, as these are needed to help Singapore weather economic storms. That left borrowing as a viable option for long-term infrastructure projects, and GST to meet recurrent needs.

Things began heating up in the House when Ms Lim voiced her suspicion that the GST hike might have been among this year’s measures if the public had not reacted so negatively when the idea was floated.

“And I rather suspect myself that the Government is stuck with that announcement. Otherwise, perhaps we would be debating a GST hike today,” she said.

This triggered a rebuttal from Law and Home Affairs Minister K. Shanmugam, who said Ms Lim was “basically making an accusation that the Government is behaving willy-nilly, dishonestly”.

Ms Lim said she did not make any such accusation and was merely raising an “honest suspicion”.

To this, Mr Shanmugam said: “Does Ms Lim agree it doesn’t accord with the standards of a First World Parliament and honest debate for someone to come here and start talking about (how) ‘this is my suspicion. I cannot back it back’?”

Mr Heng stepped back into the debate, noting he and Ms Lim were both former police officers. “Now, I want to present myself as your witness because I have been working on this ever since I became Finance Minister,” he said, adding that the GST hike was based on an honest assessment of Singapore’s fiscal position.

In a Facebook post last night, Prime Minister Lee Hsien Loong said that with the passing of the Budget, the Government has laid out its mid-to long-term plans clearly.

SPH/ST

44 COMMENTS

  1. HSK has an opaque marble ball not a clear crystal ball. His projected $1.9bn budget forecast turned out to be 4x larger, actual budget surplus is $9.6bn. WP is right to reject the premature approval for 2% GST hike after 2020.

  2. Just ask LBH, Grace Fu, Vivian, Iswaran, WKS, MBT, NEH, Massango, Yaccob, Halimah, Hri Kumar etc.
    Ask them how their Ministries asked for Budget, how they SPENT IT All.
    Any result? NO! Nothing AT ALL but we are footing the BILL>!!

  3. Not so smart. Projected 1.7 billion. Surplus 9.6 billion. Poor uncle : give you $300-. But wait long, long. B4 December 31. Head not so smart. Heart not so smart.

  4. we need a counter weight to ensure that those who are given power will continue to earn our trust & not bull doze anyhow they see fit……who has been known to fall flat on their faces in recent years

  5. Personally it’s time to bitchslap the govt and hold it accountable. Boy they sure do get huffy about their integrity don’t they?
    Well can’t really justify the tax hike so get all bothered about their honesty?

  6. GST is a HEARTLESS tax
    Taxing poor on EVERYTHING !!!!

    Sadly, while many poor are HAPPY when received rebates or school bursary
    They thought they have kind and caring system
    Didn’t they know they are getting own money back?

  7. 70% of dumb voters will wake up when 100% of their jobs and their Son/Daughter job is replaced by FT

  8. Something i dont understand.

    The sky is Blue and the clouds are white. So since the Blue sky dominate the entire sky, why are we having the cloud trying to dominate us?

  9. We have to keep remind ourselves regardless of which country we are that we put every member of the parliament in place and we also can remove anyone there by our ever powerful VOTE! Democracy is people’s power so do not fear when you vote.

  10. Mr Heng u can increase casino levy this is a fat levy only those how want to gambling and they don’t mind pay , not GST la your brain is it new or never use before ? U talk until 2020

  11. U fucking raise GST because you did not save enough for infrastructure projects. Purpose of investment is to make money out of money to fund capital expenditures.

  12. Heng Swee Keat wants to fool Singaporeans and the oppisition party by putting GST hike into the budget, kudo to WP for doing the right things.
    If the budget is approved with GST in it later when WP wants to debate and PAP monkeys will stop the debate because WP also supported and approved it. Why PAP so hurry to get it approve something is fishy

  13. “So far, we have collected alot of revenue from COE, ERP, casinos’ levy, foreign workers’ levies, stamp duties, personal and corporate taxes, existing GST, land sales among others and a further 2% additional tax on GST seems like peanuts compared to a huge avalanche of other taxes that are collected each year. Each percentage point of GST increase further boasts our coffers by around $1.6 to $1.8 billion but the financial burden bears by the common people can be enormous.

  14. Stop the bullying you are paid absurd salary to work for the citizen’s and not to look for apology. She has every right to question because you have all the access to information. So if you have it prove to her. Not demanding apologies.

  15. The PAP used to tell and remind Singaporean to spend within their means but this wasn’t the case, we are paying more and more not because of our spending habit but we are paying more taxes because of the government spending needs and the Singaporean suffer

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