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DPM Heng tells Parliament: GST hike cannot be deferred indefinitely

Assurance given that the Government will continue to study the timing of the increase in GST rate carefully

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Singapore — Speaking in Parliament on Thursday (Oct 15) during the debate on the latest supplementary budget, Deputy Prime Minister Heng Swee Keat said a hike in the Goods and Services Tax (GST) cannot be deferred indefinitely.

Mr Heng, who is also the Finance Minister, gave the assurance the Government will continue to study the timing of the increase in GST rate carefully, and take into account the pace of the country’s economic recovery, its revenue outlook and how much spending can be deferred without jeopardising its long-term needs.

In February this year, Mr Heng announced that GST rates will remain at 7 per cent in 2021 instead of going up to 9 per cent as originally planned, because of the impact of the Covid-19 crisis on the livelihoods of Singaporeans.

Mr Heng said that, mainly due to travel disruptions and the impact of the Circuit Breaker,
GST collections this year are projected to drop by 14 per cent from the original estimate before the start of the year.

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“We expect collections to continue to be lower than usual until international travel recovers fully, which we expect to be at least a couple of years away,” said Mr Heng, according to a report on todayonline.com.

During the debate on strategies to emerge stronger from the Covid-19 pandemic on Wednesday (Oct 14), NCMP Leong Mun Wai of the Progress Singapore Party (PSP) had said that by “hastily increasing taxes and fees while at the same time pledging Covid-19 support measures”, the Government was seen as “giving with one hand and taking with the other”.

Going through approximate figures himself, Mr Leong commended the Government for its shrewd management of the country’s finances and said, “it appears that there is no need for the tax and fee hikes to take place so soon”.

Responding to Mr Leong’s suggestion not to increase the GST, Mr Heng said: “Mr Leong’s suggestion to shelf the GST rate increase indefinitely means that we will lose the additional revenues from these groups which we can use to improve the lives of Singaporeans.”

For recurrent spending that benefits the current generation, such as healthcare and education, Mr Heng said the “responsible way” is to pay for them through recurrent revenues like taxes.

“This discipline ensures that every generation earns and pays its share,” he added. /TISG

Read related:Leong Mun Wai on tax and fee hikes: Govt is “giving with one hand and taking with the other”

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