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1994: GST kicks in at 3%
THE introduction of the Goods and Services Tax (GST) in 1994 was a major milestone in the evolution of Singapore's tax system. By taxing the consumption of goods and services, the government sought to reduce Singapore's reliance on income-based taxes. Revenue collected from the GST allowed for cuts in the individual and corporate income tax rates, aimed at boosting Singapore's global competitiveness and ability to attract investments and talent. The GST was also meant to strengthen the tax base as Singapore's population aged.
To allay worries over higher living costs, the government rolled out measures to offset the impact of the GST such as higher grants for lower-income households and higher subsidies for public services such as health and education. Similar offset packages accompanied subsequent GST rate hikes in 2003, 2004 and 2007 too.
While the GST paved the way for Singapore's economy to stay competitive, competition for top talent also birthed a new formula benchmarking the salaries of ministers and civil servants to private sector pay. The goal: to attract the best talent for a "clean and competent" government.
Parliament approved in November 1994 the proposal to peg ministers and top civil servants' pay to that of the top four earners in six professions - banking, accounting, engineering, law, local manufacturing firms and multinational corporations. This has led to Singapore's ministers being among the best paid in the world - a fact that has courted controversy over the years and sparked an independent review resulting in new salary benchmarks in 2012.
1994 was also the year The Business Times itself made the headlines. After BT published Singapore's flash Q2 GDP estimates in 1992 before their official release, five people were charged under the Official Secrets Act, including then economic director of the Monetary Authority of Singapore, Tharman Shanmugaratnam. The case, which stretched over more than a year, ended in 1994 with all five found guilty and fined between S$1,500 and S$6,000 each.
The Business Times has been there to report and analyse the most significant news since 1976. Every week, this feature will showcase excerpts from the biggest stories for each year that the paper has been in operation. The full text of all the stories can be found online at bt.sg/bt_40