The day after he laid out the Government’s economic plan for 2019, Finance Minister Heng Swee Keat fielded questions on the budget on Channel NewsAsia’s Budget 2019 Forum, that was broadcast live on national television and on Facebook.
In the forum, Heng confirmed that the Government will not absorb the Goods and Services Tax (GST) for essential items to help low-income or middle-income families.
In his Budget 2018 speech, Heng announced a 2 per cent GST hike that is set to go into effect in the next few years. The impending tax hike will be a blow to many Singaporeans, who are grappling with the rising cost of living – especially with the recent 30 per cent water price hike and ever-increasing electricity tariffs.
One audience member at this year’s live budget forum asked Heng what the Government is doing to help the sandwiched class who do not qualify for the initiatives launched to help the elderly and young.
Responding that “it’s important that we try and keep the cost of living affordable for our people,” Heng cited the open, competitive market in Singapore and the strengthened local currency as measures that help depress the cost of living since imported goods are now cheaper.
Heng, however, declined to consider absorbing the GST for essential items to lower the cost of living for middle-low income families. He said: “This was very carefully studied before we introduced GST. And I took a look at it again recently when this was discussed.”
The Finance Minister said that the Government will not absorb GST for essential items since it wants to make the GST system simple. He said: “We do not cause any confusion, everybody pays the same amount for everything we purchase.”
Heng also warned Singaporeans that the GST would have had to rise further if the nation’s founding fathers were not such good stewards of Singapore’s wealth.
When asked how the Government intends to fund Budget 2019, which is filled with so many goodies that it has been called an ‘election budget,’ Heng said that he’s “very grateful as Finance Minister that I inherited a very good situation. And in particular, I’m very grateful to our founding fathers for leaving us with these reserves.”
Noting that the surpluses in 2018 came from unexpected developments like higher statutory board board contributions and increased stamp duty, Heng cautioned that a budget cannot be planned on the basis of such “one-off events”.
Noting that a surplus today does not mean that the government will splurge tomorrow, Heng said: “In fact, if our founding fathers had taken that approach, we would not even have one cent of this net investment return contribution to talk about and we’ll not be talking about increasing GST from 7% to 9%, it will be much more.”