SINGAPORE (Feb 18): Deputy prime minister and Minister for Finance Heng Swee Keat said that the GST increase which was announced last year to be increased to 9% by 2021, will be delayed.
At today’s Budget 2020, Heng said that GST rate will remain at 7% in 2021.
“However, we will not be able to put off the increase indefinitely. We will still require recurrent sources of revenue to fund our structural spending needs in the medium term. The GST increase continues to be necessary sometime from 2022 to 2025,” says Heng.
Meanwhile, the government will continue to asses the appropriate time for the increase in GST.
Heng assures that there will be sufficient lead time for Singaporeans to ease into the GST increase.
“We want to assure everyone that when we raise the GST rate, the government will ensure that our taxes and transfers system remains progressive,” he adds.
GST on publicly-subsidised healthcare and education will continue to be absorbed.
The government will also enhance the permanent GST Voucher scheme such that lower-income households will continue to get more help; and provide an Assurance Package when the GST rate is raised.
In Budget 2020, Heng has set aside $6 billion to help Singaporeans will cushion the impact of the GST rise when it happens.
Lam Kok Shang, head of indirect tax of KPMG Singapore says, "The announcement of the deferred GST hike is a welcome move considering the economic slowdown due to the ongoing Covid-19 situation and the worsening global economic outlook, it will allay the fears of additional expenditure on GST by Singaporeans."
"We commend the $6 billion Assurance Package announced to help offset the impending GST rate hike to 9% by 2025. This will support lower income households to buffer the impact of the 2% hike. While we appreciate the intent, the cost of the Assurance Package must be funded from other sources. We do not anticipate an increase in tax rates as Singapore needs to retain its tax competitiveness,” he adds.
Vishal Thapliyal, Partner (Corporate Finance, Strategic Solutions & Transformation) for PwC Singapore says, “While the Minister has announced the GST will not be raised in 2021, he has kept the hike to the original timeline of 2025. Such recurring sources of government revenue are important to fund continued investment in healthcare to ensure that it remains affordable and accessible to all.”
