According to the Ministry of Finance, 1.39 million Singaporean citizens will receive S$300 cash each in August. Totalling S$410 million, the cash handout called “GST vouchers” was given to compensate Singaporeans who are over-taxed in GST.
Singapore’s GST rate is currently set at 7%, and the blanket tax cost a low income Singaporean as much as S$980 a year in direct GST consumption alone.
The news came after electricity tariff was raised by 6.8% this year, an impending water price hike in July and several tax raises in this year.
The GST compensation is expected to increase following a 2% GST hike in 2021. The GST vouchers are often used as election carrots for the ruling party, who often argued “which government in the world give cash to their people”.
Announced in Budget 2018, the S$410 million cash compensation received by citizens this year pales to the S$2.2 billion tax cuts received by companies. The Singapore government believe that the generous tax cuts will result in a “trickle-down” effect to raise wages – after feeding the executives.