GST will rise by 2%: Finance Minister confirms at Budget 2018

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Finance Minister Heng Swee Keat announced that the Goods and Services Tax will increase by 2 per cent, as he delivered Budget 2018, this afternoon. This tax hike will raise the GST from 7 per cent to 9 per cent and will be implemented sometime between 2021 and 2025, most likely after the next General Election.

The GST hike will bring in revenue of about 0.7% of the Gross Domestic Product (GDP) per year, according to the Minister. He added that the GST increase will be implemented in a progressive way.

The Minister explained that the tax hike is necessary to fill the gap and expenditures rise in the next decade as the government makes “massive investments” in four major areas of expenditure growth – healthcare, infrastructure, education and security.

Healthcare expenditure is expected to rise from the current 2.2 per cent of the GDP to 3 per cent in the next decade, according to the Minister, due to the nation’s aging population and the “chronic disease burden”. The Minister added that the aging population in Singapore is expected to double by 2030 and that the government must be ready as healthcare demands rise due to this.

Infrastructure will also be a key area of expenditure growth, with “massive investments” such as Changi Airport Terminal 5, the KL-Singapore High Speed Rail and local rail infrastructure. The Minister revealed that a whopping $20 billion will be spent on infrastructure this year, compared to the $8.5 billion that was spent in 2011.

The Minister added that the government will invest in security to keep Singapore safe, since the terrorism threat is the “highest in recent years”. The government will enhance the operational readiness of officers, partner the community, and harness technology to improve security.

The final key area of expenditure will be education, as the government invests more per child from pre-school education to lifelong learning opportunities.

To manage these rising expenditures, the Government must increase the nation’s fiscal footing, the Minister said. He added that the fundamental economic strategy of the nation has remained the same: to grow the economy while saving ahead for a rainy day and to reduce the burden of large investments in the future.

The Minister also noted that the government has been tapping on the reserves over the last decade, but that we must dispense these resources “prudently” given the mature economy and aging population. He proclaimed that relying too much on the reserves will deplete Singapore’s nest egg and stressed, “this is not the Singapore way.”

98 COMMENTS

  1. There’s no justification for Jewel and T5. Spending dumptruck loads of money on education won’t help until we define what educacation is and reduce as much as possible tuition.
    As for GST gee kick the can eh? If it’s soooo urgent why wait til after the elections?

  2. Eh? I thought the govt has been refusing to tap on reserves and now they’re saying they’ve been tapping reserves for years? Which is it?

    Also, didn’t PM Lee say there wasn’t a need to raise GST last election because they have been spending within means ?

  3. It is important to note that GST is considered to be a regressive tax. A regressive tax is one where the poor pay more tax, as a percentage of their income, than the rich. GST is a tax on consumption. Generally, poorer households spend a greater proportion of their income on consumption compared to higher income households. So, when tax is based on consumption, the poor would end up paying more tax, as a percentage of their income, than the rich. GST should never be more than 5%.

  4. I wonder the voting dept is truly independent? I smell a dead rat. They are everywhere and theres no way this is non bias. It doesnt add up. If im them i would have made it show like theres a choice but the system is for me to control. Its too big a factor to allow the public have the authority. Ill shut them up by putting a show. Well thats just evil ole me..

  5. All these years spore has been running on budget surplus ,only once did we dig into our reserve during a reccession , “last decade we have been using reserve too long and will deplete it ” guess rhere is big hole in our reserve rhrough bad investment now need to fill back wirh increase tax and also a puppet present rhat dosen’t query

  6. THEY ‘LL KEEP THE RESERVES TO TOP UP ANY SHORTFALL FOR TEMASEK AND GIC LOSSES IN INVESTMENTS. THEN TURNAROUND AND LIE TO SG THAT MORE BUDGET SPENDINGS REQUIRED TO TAP FROM RESERVES. A COVER UP BY PLAYING AROUND WITH FIGURES.

    BEING UNHAPPY BY GRUMBLING ON THE FB IS JUST WASTING TIME

    THE ONLY WAY TO FIND OUT THE TRUTH AND THEIR LIES AND TO STOP THEIR PERPETUAL DOINGS IS TO VOTE FOR A CHANGE OF GOVT.

    DO SG HV THE GUTS TO VOTE FOR A CHANGE?

    .

  7. Our Reserves have been tapped too many times? Who knows about it? Only your big boss, you and your cronies lah. Only you guys have privy to what is happening. It has never been made known to the public. Does the president even know about it?

    $300 for the elderly and wretched poor. But can collect it only by end of the year. $300/365 days = 82 cents a day. That’s barely half the price of a cup of iced Milo in a coffeeshop.

    Do whatever you all want lah. You ownself go and check ownself.

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  9. I believe the government is in no danger of running out of money. The PAP is merely maintaining the buffer plus marginal growth to last another cycle before GST is once again increased. The returns from investments are dwindling, with some portfolios sustaining appreciable loss. This is consistent with global trend. However, the PAP chose not to examine and optimise domestic expenditure, or raise taxes for businesses and high-earners. PAP takes the quick unscrupulous way of taxing the common people to make up for the declining margin (buffer) before it gets uncomfortable for them. This is standard operating procedure for the PAP – Tax the poor, spare the rich, hide the setbacks, plan future misdeeds. Honesty and accountability have never been their governing doctrine.

  10. Of cos is not enough when u don’t stop losing away and wasting about our billions of dollars CPF to lousy bad investments always make bad choices and decisions. Even our shipping line NOL also sold away almost bankrupt. Singapore will be bankrupt if these goes on. And no amount of taxes will be enough. We are a step closer to be like philipines.

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