The guiding philosophy of the Budget presented by Finance Minister Lawrence Wong on Friday (Feb 18) highlighted the importance of having reliable streams of revenue for future needs such as building a greener city, transforming the economy, preparing the healthcare system for an ageing society, and strengthening social programmes. Thus, the goods and services tax (GST) rate will increase from 7 to 9 per cent in two stages: one percentage point each time on Jan 1, 2023, and Jan 1, 2024. However, to focus only on that increase would be to miss the wood for the trees. Cushioning the impact of the GST rate increase is the $6 billion Assurance Package announced earlier, which Mr Wong has now supplemented with an additional $640 million. Also, GST will continue to be absorbed on publicly subsidised healthcare and education. And importantly, for a majority of Singapore households, the offsets from the Assurance Package will cover at least five years of additional GST expenses, while for lower-income households, the offsets will cover about 10 years' worth.
The Robin Hood redistributive impulse is strong in the Budget. Personal income tax rates for top earners will be raised, as will property tax rates - with higher taxes to be charged on non-owner-occupied and higher-end property. All in all, the guiding idea is that although taxes - including their occasional increase - are essential for contributing towards the upkeep of the nation, those who are better off than others should contribute more, while those who are less well-off can take comfort from the resulting effect of government outlays and policies. The Budget affirms this progressive idea. Many commentators have long urged the Government to do more to close the yawning inequality gaps in society. Now, comes the bill for those well-intentioned advocates. They must not shirk it.