GST voucher scheme to be enhanced: Lawrence Wong

THE permanent GST (goods and services tax) voucher scheme already offsets most of the GST payable by lower-income households, and the scheme will be enhanced on top of this, said Second Minister for Finance Lawrence Wong in Parliament on Tuesday.

Last year, taking one-off special payments into account, the bottom quintile of households (by income) in fact received more in GST vouchers than the amount of GST payable.

Mr Wong was responding to questions by Workers' Party Member of Parliament Louis Chua (Sengkang GRC) on the extent to which GST vouchers - both permanent vouchers, and special payments - offset the GST that lower-income households have to pay.

Mr Wong disclosed that from 2018 to 2020, permanent GST vouchers (GST-V) offset an average of 84 per cent of the annual GST payable by the bottom 20 per cent of Singaporean households, on a per household member basis.

These vouchers comprise an annual cash payout, an annual Medisave top-up for those aged 65 and above, and quarterly utilities rebates (U-Save) for HDB dwellers.

On top of the permanent vouchers, there are special payments on an ad hoc basis. In 2019, a cash payment was given to mark Singapore's bicentennial. From 2019 to 2021, additional U-Save rebates were given to mitigate the new carbon tax. Last year, additional U-Save rebates were given due to Covid-19.

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Mr Wong said that in 2019 and 2020, such special payments offset 33 per cent of the GST payable by the bottom quintile of households, on top of the 84 per cent offset by the permanent vouchers.

"In other words, in this extraordinary year, households in the bottom 20 per cent got more from both the permanent and one-off GST vouchers, than the amount of GST payable."

As previously announced by Finance Minister Heng Swee Keat, the permanent voucher scheme will be enhanced when the planned GST hike to 9 per cent takes effect.

"An enhanced GST-V scheme will continue to be part of the progressive system of taxes and transfers that we have in Singapore, ensuring that lower-income households receive more benefits than the taxes that they pay," said Mr Wong.

Mr Chua then asked if the government had set a target amount of GST payable that should be offset under the enhanced scheme, and what proportion of Singaporeans would be covered.

He also asked if more assistance could be given to middle-income households. Currently, those who earn more than S$28,000 annually in assessable income do not qualify for the permanent GST voucher scheme.

Mr Wong declined to offer specifics at this time, as the review was still ongoing. "We will continue to do more to address inequality and social mobility, particularly given the concerns of Covid-19, and that the impact of the pandemic (is) being felt disproportionately more by the lower-income groups."

Separately, Mr Chua asked what percentage of net investment returns (NIR) and net investment income (NII) had contributed to the government's budget in the past five years.

Under the net investment returns contributions (NIRC) framework, the government can spend up to 50 per cent of the NIR and 50 per cent of the NII. Mr Wong replied that from FY2016 to FY2020, the amount of NII and NIR taken into the budget was the maximum of the 50 per cent allowable.

NII refers to the actual income received from investing Singapore's reserves, as well as the interest received from loans, after deducting relevant expenses. NIR refers to the long-term expected real returns - including both realised and unrealised capital gains - on the net assets invested by GIC, the Monetary Authority of Singapore and Temasek.