PSP sees no need for GST hike, won't support Budget: Leong Mun Wai

The Progress Singapore Party (PSP) 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 yesterday.

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 "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.

Yesterday, Mr Leong said that 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.

The GST Voucher scheme will see around 950,000 Singaporean households getting additional utilities rebates, among others.

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 in 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 that this was less than the up to $180 million in annual funding the Government is providing SPH Media Trust over the next five years.

Mr Leong said a monthly $1,200 levy on Employment Pass holders, which he had earlier mooted, 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 said. 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.