SINGAPORE - The $6 billion set aside to offset the planned increase in the goods and services tax (GST) will mean its impact on people will not hit home for five years, said Mr Liang Eng Hwa (Holland-Bukit Timah GRC) on Wednesday (Feb 26).
In his speech kicking off the marathon debate on Budget 2020, Mr Liang also pointed out that Singapore's financial discipline and prudence has paid off, a point echoed by several other MPs in Parliament.
Mr Liang, who chairs the Government Parliamentary Committee for Finance and Trade and Industry, noted that new healthcare facilities costing millions of dollars are being built in his constituency. These include a 12-storey polyclinic and several senior care centres.
"While I dislike seeing the GST rate increase, I do understand that the Finance Minister would need additional funding to help pay for these new expenditures as well as other increased spending in social areas, education, security," he said during the debate on the Budget statement.
The existing "massive and almost permanent" measures, including vouchers, to offset GST mitigates the impact of the tax on lower- and middle-income households, he added.
Under the new Assurance Package in Budget 2020, most households will get extra money to offset at least five years worth of additional GST expenses when the tax hike kicks in by 2025.
Those living in one- to three-room flats will get enough to offset about 10 years' worth.
This year's Budget - a "headline grabber", said Mr Murali Pillai (Bukit Batok) - amounted to $106 billion.
But he and other MPs noted that it still did not require a draw on Singapore's reserves.
Singapore's "disciplined and prudent financial management", combined with the Net Investment Returns Contribution (NIRC) from invested reserves, has allowed the Government to mount a robust response to the current situation, Mr Liang said.
"We have benefited from careful and tactical planning which ensures that we accumulate and set aside surpluses for a rainy day," added Ms Joan Pereira (Tanjong Pagar GRC). "Thus, we are much better prepared to weather this storm of global uncertainty, economic shifts and the Covid-19 outbreak."
Mr Liang noted that there are constant calls for the Government to spend more, given NIRC funds and the overall Budget surplus each year.
"It is always tempting to be nice and popular; and spend more today and worry about tomorrow later. Fortunately, this is not the case for Singapore's Ministry of Finance," he said.
But the adage about saving for a rainy day has never failed Singapore, he added. "It is our most valuable 20-20 foresight; and so aptly shows up in Budget 2020."