Finance Minister Heng Swee Keat announced that the Goods and Services Tax (GST) will increase by 2 per cent, as he delivered Budget 2018 yesterday. 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 tax hike comes as no surprise to many – several political observers predicted the move in the run-up to Budget 2018 and the GST increase was expected to be one of the biggest announcements during the budget speech yesterday.
However, the sharp contrast between Heng Swee Keat’s tax plan as unveiled yesterday and Prime Minister Lee Hsien Loong’s views on a possible GST hike during the 2015 General Election is notable.
On 5 Sept 2015, just a few days before Singaporeans went to the polls, PM Lee said at the PAP Headquarters: “What will make you need to raise GST? Profligate spending and irresponsible, unsustainable plans. That is what will hurt and require you to raise taxes and GST.”
Referring to the Workers’ Party’s suggestion then that the government would raise taxes after the election had been won, PM Lee asserted that the government “did not play such games with voters.”
According to the New Paper, he further added:
“I think it’s a strange psychology to think that this is a government which is only dying to do bad things to people… Do we look like that? Here we are, trying to do the best and needing support. And I would turn the argument and say, be careful if they give more votes to the WP.
“WP will become even more arrogant and oppressive over the rest of the parties as they are already so.”
The head of government also added that the PAP would be “mad” to raise taxes just because it received a strong mandate:
“Raising, adjusting taxes is a very big decision. You consider it carefully, you discuss it thoroughly, and you do it only when you absolutely have to.
“What will make you need to raise GST? Profligate spending and irresponsible, unsustainable plans. That is what will hurt and require you to raise taxes and GST.”
Just over two years after the PAP won the last general elections, PM Lee confirmed at the PAP Convention late last year that higher taxes are inevitable and revealed that it is a matter of when and not if taxes will be hiked.
Yesterday, the Finance Minister appeared to contradict the head of government’s stance that “profligate spending and irresponsible, unsustainable plans” will be the reason behind a tax hike, when he explained:
“Between 2021 to 2030, if we do not take measures early, we will not have enough revenue to meet our growing needs.”
Today, PM Lee commented on the Budget 2018 and touched on the impending GST hike, promising now that it will be done in a “fair and progressive manner”:
Heng Swee Keat presented #SGBudget2018 yesterday. Budget 2018 is a strategic and integrated financial plan to build us a…
PM Lee is not the only one who appears to have changed his tune
When claims that the government would raise taxes erupted in 2015, the Ministry of Finance (MOF) was another government party – besides the head of the PAP – that was quick to refute the claims, saying that they had no basis.
Posting a statement on the matter online then, MOF reiterated Deputy Prime Minister Tharman Shanmugaratnam’s earlier assertion that increased spending planned for the rest of the decade is sufficiently provided for by measures that the Government had already taken.
Shortly after the PAP Convention last year, the MOF released a new statement and said that PM Lee’s confirmation of a tax hike is “in line” with the DPM’s comments from 2015.
The Ministry said that there is enough revenue for this term of government but that since government spending has been increasing, making plans to finance such spending would “better ease in the needed measures, and to give our people and businesses some time to adjust.” It added:
“This is in line with Prime Minister Lee’s speech at the PAP convention on Nov 19, 2017, where PM Lee said, ‘For this current term of Government, we have enough revenue’,” said MOF.
“Any decision to raise taxes will not be taken lightly. But necessary investments in the future are needed.
“The Government has to remain forward-looking, planning beyond this decade, and will study all options carefully, doing it with least impact on the less well-off and on Singapore’s economy.”
Netizens had responded then that the contradiction between what the Government said before the election was won and more recently is “as clear as black and white”: