SINGAPORE - The increase in goods and services tax (GST) will proceed as planned, said Deputy Prime Minister Lawrence Wong on Tuesday (June 21), when asked if there would be any delay of the hike amid rising costs.
Speaking at a press conference where he announced a new $1.5 billion support package to cope with global inflation, Mr Wong said he understands that Singaporeans are worried that the upcoming GST increase will add to the concerns about rising inflation and cost of living.
But the overall two percentage point increase in GST is necessary, he said.
Mr Wong had announced in Budget 2022 that the planned GST increase will take place in two stages - from 7 to 8 per cent on Jan 1, 2023, and from 8 to 9 per cent on Jan 1, 2024.
Mr Wong said: "Our spending needs are rising very sharply, especially because of an ageing population and healthcare spending.
"We have looked at all the different possibilities for raising revenue and we have made various revenue moves in the Budget, including on personal income tax, property tax, and luxury car taxes, but they are still not enough and that's why we have to raise the GST."
But recognising the uncertainties and the difficult economic environment, Mr Wong said he had decided to push back the GST increase as late as possible, and to stagger the increase in two steps.
There is also an offset package in place that will ensure that the majority of Singaporean households will not feel the effects of the increase for at least five years.
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For the lower-income groups, they will not feel the impact for 10 years, he said.
Mr Wong added: "I hope everyone understands the challenges that we have to deal with going forward are not just cost of living and inflation.
"We have to deal more fundamentally with a very different operating environment. Different sorts of challenges, including climate change, more bifurcated world externally and within Singapore - domestic challenges too, including our rapidly ageing population."
To prepare Singapore well for these challenges, the country has to press ahead with its economic reforms, said Mr Wong.
Singapore cannot afford to slow down and that includes ensuring that it has a strong and sustainable fiscal position going forward.
That will enable Singapore to deal with a more uncertain future and with any challenges that it may face in the future, and also to seize new opportunities, said Mr Wong.
"That's why we have to continue with our economic reforms while doing whatever we can to help the Singaporeans who are impacted by cost of living issues, especially the lower-income and more vulnerable groups."
This article was first published in The Straits Times. Permission required for reproduction.