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Budget 2020: No GST hike in 2021, but increase will take place by 2025
The Singapore government will not be raising the Goods and Services Tax (GST) in 2021, but will defer the increase to some time between 2022 and 2025 instead, Deputy Prime Minister and Finance Minister Heng Swee Keat said in his Budget speech on Tuesday.
Singapore's official GDP growth forecast for 2020 was downgraded on Monday to -0.5 to 1.5 per cent, with the Ministry of Trade and Industry baseline expectation for gross domestic product growth to come in at around 0.5 per cent.
During Budget 2018, Mr Heng had flagged the need for GST to be raised from 7 to 9 per cent some time from 2021 to 2025 to help meet healthcare spending.
On Tuesday, Mr Heng said: "We will not be able to put off the increase indefinitely. In fact, this outbreak has reinforced the importance of continued investment in our healthcare system, including the capability to deal with outbreaks."
This means the GST increase will still be needed by 2025, as recurring revenue will be needed to fund Singapore's spending needs in the medium term.
He assured the House that the government will assess carefully the appropriate time for the increase, adding that it will provide Singaporeans sufficient lead time. He also said the government will ensure that Singapore's taxes and transfers systems remain progressive.
Meanwhile, the government will continue to absorb GST on publicly-subsidised healthcare and education.