Why GST hike should push through despite rising goods prices
The country’s social expenditures are also going up exponentially, say experts.
Whilst Singapore is seeing increasing prices of its goods and services, experts from KMPG believe the GST hike should still “proceed as planned.”
In a report, the Gan Hwee Leng, Partner, Indirect Tax, for KPMG in Singapore said healthcare and social expenditures will go up “exponentially,” and if taxes are not collected to fund these costs, it will be the individual households who will end up carrying them.
“Raising Singapore’s GST remains one of the most fiscally sustainable methods to increase tax revenue to fund these costs,” said Gan.
Singaporeans also can prepare for the rate increases since the hike will be staggered.
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“Singaporeans can still reconsider their spending patterns and explore alternatives for goods and services,” she added.
The government has also measures in place to lessen the impact of the hike. Examples of this are the $6.6 billion Assurance Package and the extension to the GST Voucher scheme target for lower-income groups.
“Pay-outs for the GST Voucher scheme have been in place for several years while others such as the Assurance Package will begin before the GST hike kicks in,” she said.
“The recently announced S$1.5 billion support package to help businesses and residents cope with inflation is also focused on ensuring that lower-income households will be sufficiently supported,” the KPMG partner added.
The GST hike is set to be implemented in 2023. By 1 January 2023, GST will be raised to 8% from 7%. The following year, it will be adjusted to 9%.