Minister in the Prime Minister’s Office, Indranee Rajah, defended the impending Goods and Services Tax (GST) hike saying it is needed to ensure Singapore’s financial sustainability, in the Government’s first official speech outlining strategies for Budget 2020.
During Budget 2018, Finance Minister Heng Swee Keat announced that the GST will increase by 2 per cent, from the current 7 per cent to 9 per cent, and that the tax hike will be implemented sometime between 2021 and 2025.
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.
Ms Rajah commented on the GST hike as she addressed about 120 members of the public at REACH’s Pre-Budget 2020 Dialogue on Tuesday (Dec 3) evening.
She said the GST hike is necessary as the Government spends more on supporting younger families and older workers and allocates more funding to security and fighting climate change.
The Minister said: “Over the past decade, government expenditure has more than doubled. While our operating revenue has also grown, it is still outstripped by our growing spending needs.”
She added that “the change in our age profile and the need to spend more on healthcare, pre-school and security – all of which are recurrent spending – will require a more sustainable or recurrent source of funding. The GST increase will allow us to meet these needs.”
Ms Rajah assured the public that the Government is planning a GST offset package to lighten the burden for needy families and said that details will be announced at Budget 2020.
The GST hike remains a contentious topic among Singaporeans, especially since it came at a time when many families saw the cost of living going up.
Water price increased by a hefty 30 per cent while electricity tariffs consistently rose. Singaporeans responding to the GST hike after Budget 2018 were quick to highlight Prime Minister Lee Hsien Loong’s campaign promise made during the 2015 General Election.
Referring to the Workers’ Party’s (WP) suggestion that the government would raise taxes after the election, PM Lee asserted that the government “did not play such games with voters.”
Speaking at the PAP Headquarters on Sept 5, 2015, in the middle of the 2015 GE campaigning period, PM Lee said, “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.”
According to the New Paper, the PM 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.”
Days after the Prime Minister made these remarks, the ruling People’s Action Party (PAP) won a resounding victory at the polls.
Achieving its best results since 2001 with 69.86 per cent of the popular vote – an increase of 9.72 per cent from the previous election in 2011 – the PAP won 83 out of 89 seats, with the other 6 seats won by the WP.