The government’s plan to raise goods and services tax (GST) rate as early as next year has not changed, said finance minister Lawrence Wong in Parliament earlier today.
The GST rate hikes were first announced by Wong’s predecessor Heng Swee Keat in his Budget 2018 speech.
The rate will be increased from 7% now to 9% between 2022 and 2025 - before the current government’s term is up.
Seen by economists as a regressive tax, GST was introduced by Singapore back in 1994 at 3% and has been raised three times since.
Over the years, the government has introduced various offset and support measures for low income families to cope with higher GST.
Given the need to meet long-term spending on the likes of healthcare, education and other social needs, the government needs to increase its overall revenue collection.
The pandemic has accentuated the need for the government to beef up its coffers.
Since the pandemic started early last year, the government has spent some $100 billion in various forms of subsidies or relief packages.
Wong told the parliament that the government will consider all factors before deciding on the timing of the rate hike.
Photo: Albert Chua / The Edge Singapore
