As they say, there are only two certainties in life – death and taxes. We cannot escape both. The big question about the GST here has always been – at least in this country with one of the largest and said to be one of the best managed sovereign reserves in the world – whether any hike is necessary now and for the immediate future.
Almost a decade ago, there had already been rumours of an impending GST hike. In 2013, Workers’ Party’s Sylvia Lim was asked in Parliament to apologise for suggesting that the government was floating trial balloons to test the ground on public reaction to an increase in the 7 per cent GST. She was asked to apologise for such a “baseless” suggestion by no fewer than three ministers – the then Finance Minister Heng Swee Keat, Law Minister K Shanmugam and the then Leader of the House Grace Fu. The WP MP stood her ground and outright refused. She said: “There was a sequence of events, which led me to have that suspicion, contributed to by the government. Secondly, Sir, I will not apologise to this House because I believe that I was doing my duty as a MP in the constitutional role that we were elected into, to give the government the forum to account to the people. And for that, I make no apology.” Touche.
Whether or not the government had any plan to raise the GST back then we do not know for sure. Perhaps if the Covid-19 pandemic had not caused so much economic disruption and forced the government to tap the reserves so extensively, the “when” in Heng Swee Keat’s “not a question of if but when” could possibly be much later than 2023/2024. The government has had to draw from the reserves to help fund more than $100 billion in support packages.
Indeed, the pandemic has now given the government a number of reasoms why it cannot wait and has to turn to the GST as an urgent and major source of revenue earlier than expected. There is a sense of urgency. The economy has to get back on its feet fast. Taking better care of an ageing population, whose vulnerability was so starkly exposed by a virus which affected seniors more than others, has become top priority. Singaporeans have to be ready to seize all the opportunities of a reshaping world. Those left behind have to be taken care of. All are valid concerns in themselves but whether raising the GST to prevent further dips into the national till is the solution has to be fully debated.
Very quickly, there has been a shift of the narrative, with Covid-19 as the backdrop and excuse. The GST is no longer seen as just another source of revenue. It is now touted as a growing component in our Budget to ensure that we do not have to use our reserves so frequently.
How did that come about?
Using the reserves to help fund the support packages was the right – and not necessarily the least desirable – thing to do. They were exactly what we have been building them up for – a rainy day. It’s that extra petrol in the tank or the spare tyre for emergency.
All these steps to cushion the impact of the proposed hike of the GST from 7 to 9 per cent are like Panadol being handed out after you have heartlessly decided to create a heavy cost-of-living headache for less well-to-do and even middle-income Singaporeans.
So many questions have not been properly answered.
How large are our reserves? Is Singapore’s strong financial standing weakening? If it is getting stronger, why is there any need at all for increasing the GST? Can the cap for Net Investment Returns Contribution (NIRC) from the reserves be raised periodically without jeopardising the long-term strategy of sharing the benefits of returns from the NIRC and from the Net Investment Income from past reserves of our remaining assets? Have all options been thoroughly explored and debated in public?
Convince us.
Otherwise, GST is nothing more than Gasak* Singaporeans Tax. (*“Gobble up” in Malay).
Tan Bah Bah, consulting editor of TheIndependent.Sg, is a former senior leader writer with The Straits Times. He was also managing editor of a local magazine publishing company.
Correction:
Sense and Nonsense Feb 6: “Bring back the Chinese dialects. Be the Singaporean Chinese we should be and not what the PAP wants us to be.”
The column wrongly described Tan Lark Sye as a son-in-law of Tan Kah Kee. He was not. I apologise for the error.