As we usher in the new year, 2023 also brings along an increased Goods and Services Tax (GST) rate of 8 per cent.
By 2030, one in four Singaporeans will be over 65 years old. This will cause healthcare expenditure to increase.
In addition, social spending will be increasing as Singapore strives to do more for our communities, and care for the young, vulnerable, and the needy among us. To support such expenses, the government has to increase revenue base accordingly, and raising the GST rate is one way to do so.
To help Singaporeans cope with the impact of the GST hike, the government has introduced a S$6.6 billion Assurance Package (AP) for GST, which was further enhanced to S$8 billion as announced in November 2022.
However, how many of us actually know what the AP actually consists of, and how much support we can receive from it?
What is the purpose of the Assurance Package?
To help Singaporeans cushion the impact of the GST hike, the government has introduced the AP, which is designed to help Singaporeans in areas of daily essentials such as food, groceries, utilities and healthcare.
This AP support is provided on top of the permanent GST Voucher (GSTV) scheme that was introduced by the government in Budget 2012 in order to help lower- and middle-income Singaporean households defray their GST expenses.
First introduced in 2020, the AP has been topped up twice so far – the first top-up of S$640 million was announced during Budget 2022, and the second top-up of S$1.4 billion was announced in November 2022.
These top-ups, which now bring the AP to S$8 billion, are aimed at ensuring that the support for Singaporeans remains adequate amid inflationary pressures.
The AP will help offset additional GST expenses for the majority of Singaporean households for at least five years, with around 10 years offset for lower-income households.
While Singaporeans will definitely feel the pinch of higher prices and have to adjust to them, the government remains committed to helping Singaporeans through this.
However, it’s worth noting that the average Singaporeans are not the ones who contribute the most to GST revenue.
As a matter of fact, around half of net GST revenue is contributed by tourists and foreigners residing in Singapore, while the top 20 per cent of resident households account for close to 20 per cent of net GST revenue. Therefore, the GST hike can be expected to mainly affect these groups rather than the average Singaporeans.
How will Singaporeans benefit from the Assurance Package?
The AP comprises cash payouts, Community Development Council (CDC) Vouchers, additional GSTV – U-Save, and MediSave top-ups.
These will be disbursed over five years, and the first tranche of AP benefits will be disbursed from December 2022 to February 2023.
The good news is that all Singaporeans will stand to benefit from the AP. Here’s a breakdown of the support that you will receive:
- AP Cash for all adults
As part of the AP, all adult Singaporeans will be receiving cash support.
For starters, all Singaporeans aged 21 and above will receive between S$700 and S$1,600 over five years. The amount received will depend on factors such as assessable income and number of properties owned.
The first round of AP cash has already been disbursed, in which about 2.9 million adult Singaporeans received up to S$200 of AP cash in December 2022, ahead of the GST hike.
- GSTV – Cash (Seniors’ Bonus) for lower-income seniors
In February 2023, lower-income senior Singaporeans aged 55 and above will receive up to S$300 cash under the GSTV – Cash (Seniors’ Bonus). Eligible seniors cannot own more than one property, and must have an assessable income of S$34,000 and below a year.
These payouts will be disbursed over three years until 2025, and will benefit a total of about 85,000 seniors.
- Rebates and CDC Vouchers for Singapore households
Apart from the cash payouts, eligible HDB households will also receive additional GST Voucher (GSTV) – U-Save rebates to offset utility bills from 2023 to 2026.
This is on top of the regular GSTV – U-Save rebates under the permanent GSTV scheme of up to S$95 for eligible households.
This year, up to S$95 of additional GSTV – U-Save rebates will be credited in January 2023. This amount will be bumped up to S$190 in 2024 and 2025.
The amount of additional rebates received will depend on the type of HDB flat that the household owns. Households staying in one-room and two-room HDB flats will receive S$570, while those living in executive or multi-generation flats will receive S$330 in total over the next three years.
From 3 January 2023, every Singaporean household will receive a total of S$300 in CDC Vouchers. This comprises S$200 CDC Vouchers under the AP announced at Budget 2022, and S$100 CDC Vouchers from the S$1.5 billion Support Package announced in October 2022.
The CDC Vouchers can be spent at participating hawkers, heartland merchants and supermarkets until 31 December 2023.
- MediSave top-ups for children and seniors
In February 2023, the government will also be providing MediSave top-ups to children aged 20 and below, as well as eligible seniors aged 55 and above.
S$150 will be credited annually into their CPF MediSave Account under the AP MediSave, which will be disbursed until 2025.
These top-ups will benefit about two million Singaporean children and seniors.
The government is doing what it can to support Singaporeans
The Singapore government recognises the recent inflation, which is why it has pushed out support packages to help with the increased cost of living.
While AP is meant to cushion the impact of the increase in GST expenses, the government has provided additional support for Singaporeans over the course of 2022 via three support packages – the Household Support Package (HSP), the S$1.5 billion support package announced in June, and the additional S$1.5 billion support package announced in October.
Last year, the government doubled the amount of GSTV – U-Save that households received in April, July, and October under the HSP. There have also been additional top-ups to Child Development Accounts, Edusave Accounts, and Post-Secondary Education Accounts.
2.5 million adult Singaporeans also received a one-off Cost of Living Special Payment of up to S$500, which has been progressively disbursed in December 2022, together with the AP Cash.
All of these efforts have been made in order to provide relief for Singaporeans to better cope with higher costs of living, and to ultimately ensure that no one gets left behind.
This also means that every Singaporean and every Singaporean household have received something, be it CDC Vouchers, the Household Utilities Credit, or more support for the lower-income.
At the end of the day, these efforts by the government are by no means exhaustive, so do stay tuned to the details of the enhanced S$8 billion AP in Budget 2023, when further updates will be announced.
Featured Image Credit: YouTrip
