In his Budget round-up speech to Parliament, he rebuffed calls from MPs for a 2 per cent cut in the GST.

This move would not only have little effect on spending, but would also yield less in savings for the lower- and middle-income groups than what they get from the current scheme of GST credits.

Households in the bottom 20 per cent of income earners now receive total benefits amounting to 18 per cent of household income - much more than the 2 per cent savings they would get from a cut in GST.

Mr Tharman also gave three reasons why a lower GST would not 'have the desired impact on demand and on the economy'.

First, cutting the GST "will not help business costs to any significant degree", he said. The GST does not impact business margins as companies claim back any GST they pay for their purchases from the Government.

In fact, changing this rate would result in additional costs for businesses, who would have to adjust their systems for a new GST rate on their goods and services, and then shift them back when the GST is restored.

Second, a GST cut "will not lead to any significant increase in spending". The United Kingdom recently cut its Value-Added tax by 2.5 per cent, but this has not spurred consumption, he said.

Lastly, the GST is "a valuable source of revenue" that allows the Government to pay for additional social support measures in this crisis.

The revenues collected from GST go towards programmes for the lower income like the Workfare Income Supplement Scheme, Mr Tharman said.