Goods and Services Tax (GST) will rise from 7% to 9%, but it will take effect only some time from 2021 to 2025, depending “on the state of the economy, how much our expenditures grow and how buoyant our existing taxes are“, Finance Minister Heng Swee Keat said on 19 February 2018 about the Budget statement in Parliament.
Other revenue-raising measures announced in Mr Heng’s Budget statement in Parliament include a carbon tax first announced last year that will kick off at $5 per tonne of greenhouse gas emissions from 2019. GST will be also charged on imported services from 2020.
These tax measures come as Mr Heng said that Budget 2017 is ending the year with a revised surplus of nearly $10 billion. Of this, $700 million will be shared with Singaporeans through a one-off SG Bonus for all those aged 21 and above. But some of it will be saved to pay for big-ticket items, including $5 billion for a Rail Infrastructure Fund.
While the “positive near-term outlook shows that the hard work of employers, workers and the Government is paying off” – economic growth and productivity improved, boosting the real median income of Singaporeans by 5.3 per cent – Mr Heng explained that his Budget is a “strategic and integrated plan” to ensure a fiscally sustainable and secure future for Singapore.
There were three major shifts to prepare for: a shift in geopolitical economic weight towards Asia after Brexit, and tax and trade changes by the United States; the emergence of new technologies; and Singapore’s ageing population.
To prepare for these shifts, measures announced continued on the work of previous Budgets to position Singapore for the future. There were schemes to move businesses and workers up the value chain to anchor Singapore as a Global-Asia node of technology, innovation and enterprise; projects to improve the living environment; and increased support for charity to foster a caring, cohesive society.
Undergirding these efforts is the need to keep finances sustainable for the long term, said Mr Heng. To help meet the inevitable rise in public spending, especially in healthcare, infrastructure, security and education, there was a need to act now rather than later, he said.
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Source: The Straits Times, 20 February 2018