PSP sees no need for GST hike, will not support Budget: Leong Mun Wai

Non-Constituency MP Leong Mun Wai said middle-class Singaporeans would have to bear an "additional" GST burden of $1.2 billion per year. ST PHOTO: KUA CHEE SIONG

SINGAPORE - The Progress Singapore Party will not support the Budget because it sees no need for a goods and services tax (GST) hike, said the party's Non-Constituency MP Leong Mun Wai in Parliament on Monday (Feb 28).

Speaking on the first day of the debate, he suggested other means to pay for healthcare and social needs, such as a previously proposed foreign worker levy and by tapping on "unutilised revenues".

Finance Minister Lawrence Wong had announced that the GST rate would go up from the current 7 per cent to 8 per cent from January next year, before hitting 9 per cent in 2024. The increase will bring in about $3.5 billion in revenue annually.

On Monday, Mr Leong said middle-class Singaporeans would have to bear an "additional" GST burden of $1.2 billion per year.

Asked by Mr Saktiandi Supaat (Bishan-Toa Payoh GRC) how he obtained this figure, Mr Leong said the Government has previously stated that 60 per cent of GST collected is derived from top earners and foreigners working in Singapore. The remaining 40 per cent of around $3 billion in revenue then works out to $1.2 billion.

But he acknowledged, in response to a follow-up question from Mr Saktiandi, that his calculation excluded the offsets that Singaporeans would receive under a $6.6 billion Assurance Package and a beefed-up permanent GST Voucher scheme.

"I presume that the GST vouchers and all the compensation payment will apply only to the lower-income Singaporeans," said Mr Leong. "There are some applying to the middle income, but the permanent GST Voucher and all that… only the lower income."

Under the Assurance Package, every adult Singaporean will get cash payouts ranging from $700 to $1,600 over five years, delaying the impact of additional GST expenses for most Singaporean households by at least five years.

The GST Voucher scheme will see around 950,000 Singaporean households getting additional utilities rebates, among other forms of relief.

Mr Saktiandi later stressed in his own speech that without taking into consideration such offsets, Mr Leong's statements on the impact of the GST hike were "neither fair nor an accurate assessment".

Mr Leong also criticised new property tax increases unveiled at the Budget, saying a significant part of the $380 million increase in revenue annually would be borne by "many Singaporeans living in private properties who are asset-rich but cash-strapped".

The personal income tax increase for top earners would raise "only" $170 million of additional revenue per year, he said, adding this was less than the up to $180 million in annual funding the Government is providing for SPH Media Trust over the next five years.

Mr Leong said a monthly $1,200 levy on employment pass holders, which he mooted at the last Budget debate as well as parliamentary debates on foreign talent last year, would raise "almost $3 billion and make the GST hike unnecessary".

As to raising taxes to fund the recurring needs of a rapidly ageing population, he said the authorities "should first control the escalating costs of healthcare by changing the way our healthcare system works".

Any forecasted large healthcare cost increases could be paid for using "$30 billion of unutilised revenues annually", he added.

He derived the figure from what he said was the unutilised half of Net Investment Returns - some $20 billion - plus $10 billion of land sales proceeds being ploughed into the reserves.

Mr Leong also pointed to Mr Wong saying that to manage spending growth, the Government has cut the budgets of all ministries and organs of state by 2 per cent since 2017; with a further 1 per cent cut to be applied from financial year 2023.

This 3 per cent cut on an estimated $102.4 billion Budget this year will result in "saving $3 billion" and again, shows that there is no need for the GST hike, he said.

"We are also against the 'goodie bag' approach as adopted by the Government to convince Singaporeans to accept the GST hike," he said. "Handing out short-term, ad hoc goodies to Singaporeans instead of using permanent schemes will not produce resilient Singaporeans, but dependent Singaporeans."

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