GST hike is a reasonable price to pay for a stronger fiscal footing

IF the Singapore government means to build a more sustainable fiscal base, a Goods and Services Tax (GST) hike may be hard to avoid in the next few years.

Total outflow from Singapore's national budget has grown at an annual pace of 7.1 per cent over the past five years - driven by needs in health care, transport and non-recurring funding for key initiatives such as the Pioneer Generation Package and the Wage Credit Scheme - while operating revenue grew at just 4.5 per cent per year.

As a matter of responsible fiscal planning, and because each Parliament is forbidden from running a fiscal deficit over its term, raising revenues is something that the current government may need to consider, as Prime Minister Lee Hsien Loong noted over the weekend.