Deferring upcoming GST hike will only ‘store up more problems’ for the future’: Lawrence Wong
DEFERRING the upcoming goods and services tax (GST) hike will only “store up more problems” for the future and leave Singapore with less resources to take care of its growing fiscal needs, Deputy Prime Minister Lawrence Wong has said.
This was his response, given in written form and released late on Wednesday (Aug 2), to a question from Bishan-Toa Payoh Member of Parliament Saktiandi Supaat on the drivers of Singapore’s corporate income tax revenue, and whether its upward trajectory suggests that the GST hike can be deferred or cancelled.
The increase to the GST, to 9 per cent from the current 8 per cent, is scheduled to take place on Jan 1, 2024.
In his reply, Wong said the government adopts a “responsible approach” to managing Singapore’s fiscal resources, and takes into consideration not just the year-on-year changes, but the medium-term trend in its expenditures and revenues.
With an ageing population and rising healthcare costs, government expenditure is expected to grow to over 20 per cent of gross domestic product by FY2030. “This has yet to account for additional spending that may arise from new policy initiatives,” added Wong, who is also Finance Minister.
And while Singapore may get some upside to its revenue from time to time, it generally does not grow faster than GDP in the medium term without tax-rate changes, noted Wong.
“That is why the revenue measures announced at the recent Budgets, including the GST increase this and next year, remain necessary to meet our medium-term spending needs,” he added.
Nevertheless, the government will continue to monitor revenue and expenditure trends closely, and adjust its fiscal strategies in a way that is “fair to both the current and future generations of Singaporeans”.
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