The second minister of finance Indranee Rajah said in Parliament on 11 January that the exact timing of the upcoming 2% GST hike is not certain yet, but the government support will help to mitigate its impact on households.
Deputy Prime Minister Heng Swee Keat previously said that the GST will not be raised in 2021 but it will take place between 2022 and 2025.
Prime Minister Lee Hsien Loong also touched on the upcoming GST hike in his New Year’s message, hinting that it will be revisited soon.
Indranee Rajah said Singapore needs “sound fiscal foundations” and that GST is a part of the country’s sound revenue structure that supports businesses, healthcare, households, and education.
She added that the GST hike will be significantly mitigated by a $6 billion Assurance Package that will pay between $700 to $1,600 to Singaporeans over the next 5 years in the form of cash payouts.
Lower-income households will also receive more support from the package with the impact for them delayed by around 10 years.
Indranee was asked in Parliament if the government considered delaying the GST increase to “avoid adding on to the inflationary pressure” and she said that the government had shared that the exact timing the GST increase would be imposed, would depend on the economy, expenditures, and tax buoyance before the pandemic.
She said that the delay of the GST increase in 2021 was “in direct recognition of the hardship that was felt by the people because of the pandemic”.
She said:
“So it’s not something we can put off forever, but the exact timing is something that we have to think about.
In deciding the timing for the GST hike, we are carefully considering all the overall economic conditions. The economy is recovering steadily, and barring fresh disruptions, it should grow in step with global economic recovery. And we expect GDP to grow by three to five per cent in 2022.”