DPM Tharman explains rationale for planned GST hike

Deputy Prime Minister Tharman Shanmugaratnam said the GST increase is part of the "balance that we are striking". PHOTO: ST FILE

JAKARTA - The planned increase in the goods and services tax (GST) in Singapore reflects the balance between staying competitive and staying inclusive, and in particular, being able to afford the quality healthcare that an ageing population needs, said Deputy Prime Minister Tharman Shanmugaratnam.

"The Budget announcement of a future increase in GST from 7 to 9 per cent is a part of the balance that we are striking," said Mr Tharman at a forum in Jakarta on Tuesday (Feb 27).

"That balance between staying competitive, ensuring that we can grow at a sustainable pace, but at the same time staying inclusive, and in particular, being able to afford the quality healthcare that an ageing population needs - that's foremost on our minds."

Singapore's Finance Minister Heng Swee Keat announced on Feb 19 at the release of Budget 2018 that the GST will be increased for the first time in more than a decade, from 7 per cent to 9 per cent, and that the hike will be implemented some time from 2021 to 2025.

Mr Tharman added that Singapore can do so in a way that is fair both to the poor and the middle class, and those who are better off will "one way or another have to pay more over time. But we want to do it in a way that doesn't hurt our competitiveness".

Mr Tharman was speaking at a panel discussion at a conference organised by Bank Indonesia and the International Monetary Fund (IMF).

Other panellists included IMF managing director Christine Lagarde, Indonesia's Finance Minister Sri Mulyani Indrawati and former Australian deputy prime minister and federal treasurer Wayne Swan.

The event is part of the lead-up to October's IMF-World Bank Annual Meetings in Nusa Dua, Bali.

Ms Lagarde also met Indonesian President Joko Widodo in Jakarta on Monday, where she accompanied Mr Joko on a blusukan, or community visit, to the Pertamina Hospital and Tanah Abang Market.

Ms Lagarde said that Indonesia's economy continues to prove resilient with a sound economic performance and favourable outlook, and commended Mr Joko and his government on their successful economic management and strengthened policy frameworks.

"We look forward to holding the 2018 IMF-World Bank meetings here in October 2018, and I would like to thank the authorities for their excellent cooperation," she added.

Corrrection note: This article has been edited for clarity.

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