SINGAPORE: In Singapore news today, Deputy Prime Minister Lawrence Wong said in Parliament earlier this week that there is no need to raise the Goods and Services Tax until 2030.
Singapore’s GST is currently at 9 per cent, having been raised by one percentage point in two tranches on Jan 1, 2023, and Jan 1, 2024.
Mr Wong, also the Minister for Finance, replied to a question raised by Progress Singapore Party (PSP) and Non-Constituency Member of Parliament Hazel Poa during the Budget Debate this week.
She asked if an increase in the GST would be needed until 2030.
In response, Mr Wong said, “We have closed the funding gap up to 2030. The GST increase that we announced was intended for this, so we are okay up to 2030. We do not need further GST increases up to 2030.”
He explained that the hike in the GST from 7 to 9 per cent, which was supposed to have been implemented in 2021 but was deferred in light of the challenges of the Covid-19 pandemic, had been meant to close the funding gap between revenue and expenditure till 2030.
Revenues from the increase had been set to help fund healthcare and social services, especially for the country’s ageing residents.
When Mr Wong announced in June 2022 that the GST hike would proceed as planned by the beginning of the following year, he noted that Singapore’s spending needs had risen “very sharply, especially because of an ageing population and healthcare spending.
We have looked at all the different possibilities for raising revenue and we have made various revenue moves in the Budget, including on personal income tax, property tax, and luxury car taxes, but they are still not enough and that’s why we have to raise the GST.”
In a paper published last month, the Ministry of Finance (MOF) said it expects that government spending will increase to around 19 per cent to 20 per cent of gross domestic product from 2026 to 2030 and may rise above 20 per cent of GDP by the financial year 2030.
And on Wednesday, DPM Wong said that as for beyond 2030, Singapore will have to wait and see, said DPM Wong.
“Post-2030, we’ll have to see what the picture is. And beyond that, we’ll have to see if indeed there is a funding gap, if there are increased expenditures, and whether or not additional revenues or tax changes are needed to close those funding gaps.”
/TISG
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