You are here
Budget 2020: S$6b package to cushion impact of upcoming GST increase
WHEN the government raises the goods and services tax (GST), it will provide a S$6 billion package to cushion the increase for Singaporeans, Deputy Prime Minister and Finance Minister Heng Swee Keat said in his Budget speech on Tuesday.
Under this Assurance Package, the majority of Singaporean households will receive offsets to cover at least five years’ worth of additional GST expenses incurred.
Lower-income households will receive “much more”, Mr Heng said. Those living in one- to three-room HDB flats will receive offsets equivalent to about 10 years’ worth of additional GST expenses incurred.
Although GST is paid by all in Singapore, including foreigners visiting and working here, the Assurance Package will benefit only Singaporeans.
The package also provides for a cash payout ranging from S$700 to S$1,600 over five years for every adult Singaporean.
For illustrative purposes, a family of four with a combined income of S$6,000 living in a four-room HDB flat can receive in total about S$7,000 in offsets over five years, including about S$4,000 in cash.
In addition to the transitional support, the government already has in place the permanent GST Voucher Scheme, which defrays GST for lower- to middle-income Singaporeans.
When the GST is raised, the government will enhance the GST Voucher Scheme, Mr Heng said on Tuesday.
“I will maintain the government’s public commitment to fully offset the GST for the lower half of retiree households, significantly offset the GST for the upper half of retiree households, and offset about half of the GST for lower-income households with no elderly persons,” he added.
To meet this commitment, the government will set aside S$6 billion for the Assurance Package.
Singapore will raise the GST by two percentage points, to 9 per cent, by 2025. On Tuesday, Mr Heng announced that the rate increase will not take effect in 2021, which means the GST rate will remain at 7 per cent in 2021.
For more Budget 2020 stories, visit bt.sg/budget20.