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, in a progressive way.
It is of interest that the GST hike will only be implemented from 2021, as it means that the tax hike will most likely only go into effect after the next General Election which must be held by 15 Jan 2021.
Singapore will celebrate 200 years since Sir Stamford Raffles arrived in Singapore, next year, and many expect the Government to celebrate the occasion by giving cash bonuses to Singaporeans.
This – combined with the $100-$300 all Singaporeans will receive as a one-off bonus this year due to the exceptional Budget surplus of FY2017 – could signal that the next election will be held earlier, given past election trends.
The nation was celebrating its 50th year of independence in 2015 when the last General Election was called. Citizens received a “SG50” cash bonus in the run-up to the election, which the PAP won with an overwhelming majority.
In Budget 2015, middle-income earners who paid personal income tax received a 50 per cent rebate of up to $1,000. Besides this, eligible Singaporeans aged 55 and above received a one-off Seniors’ Bonus of $150 to $600 in cash, as well.
2015 was also the same year that the nation’s founding prime minister Lee Kuan Yew passed on. Political observers speculated at the time that the Government called a General Election earlier than expected during the last cycle, to capitalise on the wave of goodwill that poured forth after the political leader’s passing.
The General Election before that, was preceded by Budget 2011, in which the Government distributed $1.5 billion worth of “growth dividends” to Singaporeans. 80 per cent of citizens received $500 to $700 each that year.
With the trend of one-off cash bonuses preceding General Elections in recent years, it may come as no surprise to some if the next election is called as soon as 2019. If this happens, the people will be hit with the tax hike two years into the new government’s term.