SINGAPORE - Singapore on Monday (Feb 19) announced it plans to raise its sale tax to 9 per cent from 7 per cent, but said the change will be only be made "sometime" between 2021 and 2015.
Finance Minister Heng Swee Keat told parliament of the plans to raise the Goods and Services Tax (GST), which has been at 7 per cent since 2007.
"The exact timing will depend on the state of the economy, how much our expenditures grow, and how buoyant our existing taxes are. But I expect that we will need to do so earlier rather than later in the period," Heng said.
"This GST increase is necessary because even after exploring various options to manage our future expenditures through prudent spending, saving and borrowing for infrastructure, there is still a gap."
A hike in GST was widely expected as Singapore has to increase social spending to meet the needs of its rapidly aging population.
Heng added that increasing the GST by two percentage points will provide the government revenue of almost 0.7 per cent of GDP per year.
Singapore introduced its GST in 1994, with a 3 per cent rate. This was raised to 4 per cent in 2003 and 5 per cent in 2004.