SINGAPORE (Mar 1): Singapore may have accumulated an estimated surplus of $15 billion during the current term of government, but this does not indicate an upcoming spending spree.
For one, the surpluses will not be used to stall an impending Goods and Services Tax (GST) hike due to happen from 2021 to 2025.
On Feb 28, in rounding up parliamentary debate on the broad fiscal principles of this year’s Budget, Finance Minister Heng Swee Keat underscored the necessity of the planned GST hike, and reiterated the government stance on saving for a rainy day.
“As the government, it is our responsibility to anticipate and plan ahead for future needs. When doing so, we need to distinguish between one-off factors and underlying structural increases,” Heng said.
This GST hike, he added, goes towards structural increases such as in healthcare spending, preschool education and security. Structural spending, such as that on healthcare, is also to be taken differently from spending on one-off packages, such as the Merdeka Generation Package.
Pointing to an Organisation for Economic Co-operation and Development paper, Heng noted that governments must raise primary revenues so they can fund rising costs without increasing public debt.
The finance minister also explained that the government does not spend all of the current surpluses. “We should not have the mentality of trying to spend everything that we have, before the end of each term of government,” Heng said.
How then, does Singapore’s government intend to use its surpluses for long-term planning?
Read more in this week’s edition of The Edge Singapore, (issue 871, week of Mar 4), available at newsstands now. Login to access the full story, Singapore still cautious on spending as structural costs rise, or click here to subscribe.
