The proposed GST hike has been delayed for another year and it will go up to 8 percent in 2023 and then subsequently 9 percent in 2024, as announced by Finance Minister Lawrence Wong in his budget speech.
The increase from 7 percent to 8 percent will take place on 1 Jan 2023 while the increase from 8 percent to 9 percent will take place on 1 Jan 2024.
The increase in GST as said by Mr Wong is necessary for the country’s healthcare expenses and also for supporting seniors.
He added that the increase was planned in two stages taking into account the current overall situation in Singapore such as the pandemic, the current economy in the country as well as inflation.
GST on essentials like public subsidised healthcare and education will continue to be borne by the Government.
All Town Councils will receive an additional sum of $15 million per year to make up for costs of GST payable on service and conservancy charges (SCC).
Other Government fees and charges in 2023 will remain the same and they are fees from licensing, fees charged by government agencies for services provided as well as school fees in ITEs and Polytechnics and carpark rates.
There will also be a Committee against Profiteering set up to deal with businesses who tries to use GST as a cover for increasing their prices.
$640 million set aside to deal with the increase
To deal with the impact which the increase in GST will potentially cause, $640 million has been set aside and will be added to the $6 billion Assurance Package which was first announced in 2020.
The GST voucher scheme will also see improvements to it.
Both these packages will come into force before the GST hike comes into play so that Singaporeans can benefit from both the packages simultaneously.
The enhanced Assurance Package is expected to cover up to five years of GST increases for most of the Singaporean households and up to ten years for the lower income households.
Every adult Singaporean is expected to get $700 to $1600 in cash payouts while seniors can expect to get $600 to $900 in a special GSTV Cash Senior Bonus.
Depending on household types, eligible households will get extra U-save rebates of up to $330 to $750 while Singaporean children and seniors will further receive $450 in Medisave top-ups.
Additional CDC vouchers amounting to $200 each year will be given to households in 2023 and 2024.
The CCC ComCare Fund will also be topped up an amount of $5million over five years and self help groups will be provided $12 million over four years.
Another $40 million will be put aside under the Productivity Solutions Grant for businesses who require subsidies in accounting and their point of sale solutions.
Improvements in GST voucher scheme
Currently, the GST scheme has three components.
Under the improvements announced, the rebate for service and conservancy charges will become a permanent part of the scheme.
The income threshold for the scheme will also be increased to $34,000 from the current $28,000 so that more Singaporeans can receive the benefits.
For households with annual values of $13,000 and below, the cash quantum will be increased by $500 and for those between $13,000 and $21,000 it will be increased to $250.
The enhanced scheme will also continue to offset GST expenses for households with lower to middle income.
For lower household incomes without seniors, the GSTV will cover half of their yearly GST expenses.
In summary, Mr Wong said that with all the additional measures, lower income households will have received much adequate support as they will be well looked after.
Image source: Lawrence Wong/Facebook
