GST hike needed to put public finances on ‘sounder basis’, provide for growing healthcare needs: PM Lee
SINGAPORE: The planned Goods and Services Tax (GST) hike will not be popular, but it is something that must be done, Prime Minister Lee Hsien Loong said on Wednesday (Mar 2).
“Raising GST is difficult and unpopular,” Mr Lee said in a Facebook post as the Budget 2022 debate concluded.
“But it is necessary to put our public finances on a sounder basis, and provide for our growing health care needs.”
The Government plans to raise GST from 7 per cent to 8 per cent in 2023, and then to 9 per cent in 2024.
Reiterating a point made by Finance Minister Lawrence Wong in his round-up speech in Parliament earlier on Wednesday, Mr Lee said that Government spending “must be responsible and disciplined”.
“We cannot rely on drawing more and more from our reserves. We need to husband these reserves to provide for both ourselves and future generations,” he said.
“Our forefathers’ prudence and restraint built up the reserves that have seen us through COVID-19. We must do the same for future generations, who will surely encounter many more crises of their own.”
And while it is easy to push the burden of taxes to the wealthy, the arrangement is untenable, Mr Lee added.
“A tax system where the burden is borne by just a small group, and the rest piggyback on their contributions, cannot be sustained,” he said.
“Our system is based on collective responsibility. Everyone contributes something, according to their means.
“Similarly, everyone benefits from the state’s spending, with the more vulnerable benefitting more. This is a fair and inclusive approach.”
“The GST is part of this tax system,” Mr Lee added.
Concluding his post, Mr Lee said that the enhanced S$6.6 billion Assurance Package will “cushion the impact of the GST increase for all Singaporeans” while the permanent GST Voucher Scheme will “provide continuing support for lower to middle-income groups, even beyond the transition”.
“I hope Singaporeans will understand why we are doing this, and support the government to build sustainable social safety nets for Singaporeans,” he said.
The Budget was passed on Wednesday, with Workers' Party and Progress Singapore Party Members of Parliament recording their dissent.