Parliament: Law changed to allow use of a fund for new Assurance Package to delay impact of GST hike

The GST is slated to rise from 7 per cent to 9 per cent between 2022 and 2025. PHOTO: ST FILE

SINGAPORE -The Goods and Services Tax Voucher Fund can be used to fund a new package to cushion the impact of the impending GST hike for all Singaporeans, following changes to a law that Parliament passed on Thursday (March 26).

The changes to the GST Voucher Fund Act will put in place measures announced in Budget 2020 in February.

The $6 billion Assurance Package, with money from the GST Voucher Fund, will help to delay the impact of the GST increase for most Singaporean households, Deputy Prime Minister and Finance Minister Heng Swee Keat had said then

It will give all adult Singaporeans cash payouts of between $700 and $1,600 over five years.

The GST is slated to rise from 7 per cent to 9 per cent between 2022 and 2025.

The amendments expand the purpose of the GST Voucher Fund such that the beneficiaries are no longer confined to those who are less well-off, Second Minister for Finance Lawrence Wong said in Parliament on Thursday (March 26).

"The GST Voucher Fund can then be used to fund the Assurance Package for GST, which will benefit all Singaporeans during the transition period," he said, with lower-income Singaporeans getting greater support.

"Having said that, the weight of our assistance in the GST Voucher Fund will still go towards lower-income Singaporeans, who will continue to receive more support."

Since 2012, the existing GST Voucher scheme has been funded by the GST Voucher Fund. Under this scheme, lower- and middle-income households receive annual cash payouts, MediSave top-ups and utilities rebates.

The changes will also allow aid to be given as grants-in-aid to defray expenses incurred by parents or guardians for infants and children under their care and charge.

A new section to the law has been added to safeguard against legal action being inappropriately taken against the GST Voucher Fund, which is for general welfare, Mr Wong added.

Nominated MP Walter Theseira asked if the changes implied a shift away from the original intent of the GST Voucher Fund, which was to directly finance relief from the GST for low-income Singaporeans.

Mr Wong assured Associate Professor Theseira that this was not the case.

The Government has a longstanding commitment to lower-income Singaporeans, and will continue to provide more support to them through the existing permanent GST Voucher scheme, which will be enhanced when the GST rate goes up, he said.

Nominated MP Anthea Ong asked for the GST relief to be extended to migrant workers, while Ms Joan Pereira (Tanjong Pagar GRC) asked for essential items that are used by the elderly , such as wheelchairs and hearing aids, to be exempted from GST.

Mr Wong said that while the Government appreciates the contributions of migrant workers, it has to put Singaporeans first as fiscal resources are limited.

"This reflects the responsibilities and privileges of citizenship," he said. Still, the Government will continue to look at how it can more directly address the concerns and needs of migrant workers by working with organisations that look after their welfare.

He explained to Ms Pereira that Singapore has chosen to adopt a broad-based GST system with minimal exemptions to help keep the GST rate relatively low while providing targeted support to the lower-income and elderly.

Seniors also receive more benefits under the GST Voucher scheme through Medisave top-ups, and can tap on the Seniors' Mobility and Enabling Fund for assertive devices and home care products, the minister added.

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