SINGAPORE: The Goods and Services Tax will be increased to 7 percent, up from 5 percent presently.
This was announced by Prime Minister Lee Hsien Loong in Parliament on Monday but when exactly will be decided later.
Speaking in Malay, Mandarin and English, Mr Lee explained that the hike is necessary to finance the enhanced social safety nets, needed to help the lower income group, and he emphasised that the offset package will more than counter the rise in GST.
While Singapore's current model to tackle the widening income gap is sound, Mr Lee said the government will take on 2 approaches to deal with the new environment - to strengthen the safety nets and tilt the balance in favour of the lower-income groups who do not benefit from the fruits of economic growth.
To do this, government spending will have to go up. The government now spends some 15 percent of its GDP - one of the lowest in the world.
"This is inevitable over the next 5 to 10 years - infrastructure investments will cost money - R&D is to cost $5b over the next 5 years; as medical technology improves, people age and more will go to hospital to get more treatment so spending is bound to go up. As we tilt the playing field across the board, the lower income will be getting another boost not just once in awhile. Therefore its better to start building resources now so that when we spend more," said Mr Lee.
To finance this, indirect taxes or the Goods & Services Tax will have to go up.
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5 comments:
2% increase is healthy, eventually a comprehensive taxing machinery like GST should have a rate between 10% - 15%.
brudder, most of those western countries with a rate between 10-15% have pretty comprehensive welfare systems lah. their welfare not wayang wayang one ok. no humiliation one ok.
Actually I think its clear what the people (citizens of SG) wants to see. An increase in tax may be inevitable but the end benefit proposed must be tangible.
Announcing such broad taxation measures without a well placed countermeasure for the poor is plain bullying.
Notice that 'welfare' is still a dirty word to the ruling party.
Increasing in taxation on the population without an corresponding
increase in welfare spending for the people is wrong. A 2% increase in GST is estimated to bring in additional $1.5 bil for the govt.
Do we seriously believe the govt is
going to increase even half this amount in welfare spending for the people?
Well, 66.6% how is it so far? Great isn't it? Nothing like a good dose of belt tightening lifestyle. Just like good old times....the good old post election times. Each and every one of them!!
Now don't you want to rush out in the street to sing (scream) ...thanks for the memories!
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