SINGAPORE: In Parliament on Wednesday (Apr 19), Workers’ Party MP Louis Chua questioned the need for the second tranche of the increase in Goods and Services Tax, which is scheduled for implementation at the beginning of 2024, as it comes at a time when many working Singaporeans struggle amid higher costs of living due to inflation.
“Many younger Singaporeans feel anxious and uneasy about the future. Some have even given up on the aspiration to raise a family here,” noted the Sengkang GRC MP.
He cited the most recent data from the Monetary Authority of Singapore which showed that core consumer prices increased by 5.5 per cent year on year in February, and moreover, food prices are up by eight per cent, an increase that has not been as swift since 2008.
And while inflation is expected to slow by the latter part of the year, core consumer prices are still expected to rise by 3.5 to 4.5 per cent in 2023 and headline inflation is expected to average at 5.5 to 6.5 per cent, figures that Mr Chua noted are “still elevated compared to recent history, and certainly out of the comfort range for many Singaporeans.”
Additionally, wages for those who are employed full-time only “barely” outpaced inflation, he added, with real median incomes growing by two per cent last year. This is only around half as fast as it used to grow years before the pandemic, when it grew by 3.8 per cent per year from 2014 to 2019.
As for the second part of the GST hike, it will mean that “working Singaporeans’ earnings power will be reduced again.”
“MAS took pains to highlight that the higher inflation rates
we have seen at the start of the year ‘reflected in part the increase in GST’, and that ‘when the impact of the GST increase is excluded, core inflation would be even lower, and closer to the historical average’. Why add fuel to fire?”
And while the government is providing support measures, both young and older Singaporeans have expressed uncertainty.
“Even some senior citizens I have met tell me that they worry most about how the higher cost of living impacts their children and feel compelled to carry on working, even though they may not wish to do so,” he added.
Mr Chua expressed the hope that “the Government can avoid introducing more pressure into the system through an untimely GST hike.”
This would be detrimental particularly if salary growth will stay weak or uneven.
“When the cost of living – real or perceived – is too high, that hurts Singapore’s attractiveness as a liveable city, it weakens our younger one’s confidence to take risks, and we become less competitive globally,” he added.
Mr Chua’s speech may be viewed in full here.
/TISG