Singapore to raise GST for first time in decade despite surplus – but taxpayers won’t feel pain for at least three years
Observers say the decision to delay the hike is a shrewd political move that will bode well for the next leader of the People’s Action Party
Singapore will hike its goods and services tax by two percentage points, the finance minister said on Monday, the first such move in a decade as the cash-rich government cited the need to pre-emptively increase revenue amid surging health care, security and infrastructure spending.
The decision to raise the GST to 9 per cent was widely expected, but the curveball announcement that the change would be stayed until “sometime” between 2021 and 2025 drew praise from observers for being politically astute.
The window falls beyond the current government’s term, which ends in January 2021.
“The exact timing will depend on the state of the economy, how much our expenditures grow, and how buoyant our existing taxes are,” Finance Minister Heng Swee Keat told parliament as he announced the 2018 budget.
“But I expect that we will need to do so earlier than later in the period,” he said. He said calls for the government to dip into national reserves to fund increased spending instead of raising the sales tax would “eat into our nest egg”.
