Last year, Singapore Finance Minister Heng Swee Keat said the Goods and Services Tax (GST) would be raised by two percentage points sometime between 2021 and 2025.
During his delivery of the 2020 Budget Speech, Heng announced that the increase will not happen in 2021.
This decision comes with reviewing Singapore’s revenue and expenditure projections, and taking into consideration the current economy, especially with the challenges of the ongoing COVID-19 outbreak.
GST will remain at 7% for the next year. However, Heng said the impending increase cannot be put off indefinitely, and is ultimately still needed by 2025.
The Government will carefully assess the appropriate time for the GST hike, and Singaporeans will be given “sufficient lead time” for the change, he added.
When the GST is raised, a new S$6 billion Assurance Package will come into place to help Singaporeans offset the additional GST expenses.
“We want to assure everyone that when we raise the GST rate, the Government will ensure that our taxes and transfers system remains progressive,” said Heng.
This includes continuing to absorb GST on publicly-subsidised healthcare and education, and enhancing the permanent GST Voucher scheme to support lower-income families.
Featured Image Credit: Bloomberg
