Budget 2022: Singapore's GST to be raised in 2 steps, to 8% in 2023 and 9% in 2024

Sharon See

Published Fri, Feb 18, 2022 · 05:15 PM

Singapore Budget 2022

SINGAPORE'S Goods and Services Tax (GST) will be raised in 2 steps, with the first increase to 8 per cent taking place from Jan 1, 2023, Finance Minister Lawrence Wong said on Friday (Feb 18).

The second increase to 9 per cent will take place from Jan 1, 2024. Singapore last increased its GST to the current 7 per cent in 2007.

"Our revenue needs are pressing. But I also understand the concerns that Singaporeans have about the GST increase taking place at the same time as rising prices," Wong said in his Budget speech in Parliament

Where the timing of the GST hike is concerned, Wong said he has carefully considered the overall situation - the ongoing pandemic, the state of our economy and the outlook for inflation.

Singapore's core inflation reached 2.1 per cent last December, the highest since 2014, although gross domestic product (GDP) in 2021 beat advance estimates with a 7.6 per cent expansion.

Wong said the revenue from the increase in GST will go towards supporting Singapore's healthcare expenditure and to take care of its seniors.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

VIEW ALL

The Republic's healthcare expenditure tripled from S$3.7 billion in 2010 to S$11.3 billion in 2019. Excluding Covid-19-related expenditure, Wong said the government is expected to spend about S$27 billion, or about 3.5 per cent of GDP, by 2030 if it continues to increase at a similar rate.

A 2-percentage point hike in GST is expected to raise about S$3.5 billion in revenue, which is about 0.7 per cent of GDP. This does not include the government offsets such as the permanent GST Voucher scheme.

"In fact, the GST revenue by itself will not be sufficient to cover our additional healthcare spending," Wong said, adding that other areas of social spending are rising too.

This is why there are also concurrent changes to the personal income tax, property tax and vehicle tax, he said.

In 2007, the government implemented a 2-percentage hike to the GST to 7 per cent the same year it was announced. Prior to that, the increase from 3 per cent was similarly introduced in 2 steps - to 4 per cent in 2003 and 5 per cent in 2004.