In the 2018 Budget speech yesterday (Feb 19), Finance Minister Heng Swee Keat announced that the GST will be increased by two percent to 9% by 2021. The GST will be used to pay for exorbitant projects like Terminal 5, however at the cost of living expenses for the middle class and the poor. The 2% increase is expected to give the government S$1.8 billion a year, in addition to about S$11.1 billion collected every year off the existing 7% GST rate.
Finance Minister Heng Swee Keat sugarcoated the GST increase as “progressive” and lied that all of the GST increase will be spent on education, healthcare and GST vouchers. There is no mention of Terminal 5, and in recent years, several billion dollar projects like Garden By The Bay, Bishan Park and Project Jewel were all funded by GST:
“The GST hike will be implemented in a progressive manner. This means the Government will continue to absorb GST on publicly subsidised education and healthcare, and enhance the permanent GST Voucher scheme when the hike kicks in. The enhanced GST Voucher scheme will provide more help to lower-income households and seniors… The increase in GST was made to help fund expenditure in areas like healthcare, security and other social spending as the increases in these areas will be recurrent, benefit Singaporeans broadly and directly benefit current generations.”
Minister Heng Swee Keat did not present a breakdown of how the GST was spent and why other taxes, amounting to S$47 billion, were insufficient to support growing healthcare expenditures. In 2017, S$11.1 billion of taxes were collected from GST.
The PAP Minister however continued to lie about healthcare spending without providing any statistics:
“Today, the average annual Government healthcare subsidies received by an elderly person is more than six times that of a younger person, or about S$4,500 more. Additionally, by 2030, the number of elderly will increase by about 450,000 to 900,000. All in all, we expect our average annual healthcare spending to rise from 2.2 per cent of Gross Domestic Product (GDP) today to almost 3 per cent of GDP over the next decade. This is an increase of nearly 0.8 percentage point of GDP, or about S$3.6 billion in today’s dollars.”
Finance Minister Heng Swee Keat then brought out a propaganda chart showing a 50% GST of Bhutan and the GST of other countries, claiming that Singapore is “falling behind” others:
Propaganda from MOF
The exact date of 2021 remains unconfirmed but the ruling party government said it is likely early of 2021:
“The exact timing of when the GST increase will kick in depends on the state of the economy, how much our expenditures grow and how buoyant our existing taxes are. But I expect that we will need to do so earlier rather than later in the period.”