Prime Minister Lee Hsien Loong's New Year message has drawn attention to the need for sound and sustainable government finances, not only to see Singapore through the coronavirus pandemic, but to also create the basis of a vibrant economy that can generate the resources necessary to realise national goals in the longer term. He hinted in this context that the upcoming increase in the goods and services tax will be tackled in Budget 2022, which will be unveiled on Feb 18. The Government, which requires reliable and adequate revenues to carry out its social programmes, needs to raise revenues to fund the expansion of the healthcare system and support schemes for older Singaporeans in the post-pandemic phase. The guiding philosophy in this regard is that those who are better off should contribute a larger share, but everyone should shoulder at least a small part of the general burden, not least because the benefits of government spending accrue crucially to economically weaker segments of the population.

This recognition lies at the heart of the idea that taxation should be fair and progressive. Some might wonder nevertheless whether the current situation, in which Singapore faces a continuing threat from Covid-19 - a threat amplified by the emergence of the Omicron variant that could be more infectious than the Delta strain - is the right time for the Government to move on the taxation front. However, Singapore has done well in containing the public health consequences of Covid-19 while ensuring that government intervention helped the battered economy to stay afloat. Now that the economy is emerging from the pandemic, it is time to look beyond current exigencies, real and troubling though they are, to examine workable financing options for the future. The GST is a broad-based tax that forms an important component of the overall system of taxes and transfers. Taking a decision on it would review and renew the basis of sustainable government expenditure in order to prepare Singapore for the next phase of its development.