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Expert calls for sin tax increase to strengthen SG’s fiscal position

The last increase related to sin taxes was in 2018.

Apart from a goods and services tax (GST) hike, an expert from KPMG suggested that the government increase “sin taxes” to strengthen the country’s fiscal position amidst rising spending needs.
 
Sin taxes include taxes on tobacco and other goods and services deemed harmful to society. The last time tobacco excise duty was raised was in 2018, by 10%. 
 
“This could provide another source of revenue while discouraging the consumption of such goods,” Gan Hwee Leng, Partner, Indirect Tax, KPMG Singapore, said.
 
Whilst Singapore can increase other types of taxes, like sin tax, Gan said pressing ahead with the GST hike should still be the priority.
 
“GST has proven to be a reliable revenue contributor and less susceptible to recession as compared with other types of taxes.  A one-percentage point increase in the GST rate would add $1.6 billion in revenue to Singapore’s coffers each year,” Gan said.

“Moreover, as GST is only paid when goods and services are consumed in Singapore, it could in fact, encourage more savings, which was one of the rationales when GST was introduced back in 1994. It should not, by itself, contribute to inflation,” she added.

 

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