We thank Mr Wong Weng Fai for his feedback (Hold off on tax hikes for a while more due to inflation, Jan 17).
The Government understands the concerns of Singaporeans about recent cost increases and empathises with the very real pressures felt by households.
The Government will continue to directly shield Singaporeans from the full impact of the cost increases from rising energy prices and food. It provides quarterly U-Save rebates to eligible households, with the most recent payout this month. Last month, Community Development Council (CDC) vouchers were given to every Singaporean household to help with daily necessities.
These support measures are on top of other help, such as the GST (good and services tax) Voucher scheme, grocery vouchers, public transport vouchers and service and conservancy charges rebates.
The Government is assessing the situation carefully and reviewing the scope of household support measures.
The GST is part of our overall tax revenues which include income and wealth taxes. In Budget 2018, we explained the need to raise the GST rate to 9 per cent some time between 2021 and 2025.
The GST has remained at 7 per cent for 14 years, since 2007. However, since then, total government spending has more than doubled, the bulk of which has been social expenditure.
Going forward, our collective needs, especially for healthcare, social support and education, continue to rise. We cannot put off the GST increase indefinitely.
However, irrespective of when the GST is raised, the impact of the increase on Singaporeans will be effectively delayed by at least five years for the majority of Singaporean households, and by about 10 years for lower-income households. This is because the Government has set aside a $6 billion Assurance Package which will be disbursed alongside the GST increase. This would cover the increase in GST incurred by them during the transition.
The Government will also enhance the permanent GST Voucher Scheme so that lower-income households are further supported permanently.
In addition, the Government will continue to absorb GST on publicly subsidised healthcare and education.
Farah Abdul Rahim
Director, Communications and Engagement
Ministry of Finance
