GST will be raised to 9%, but government has not specified when this will be implemented.
The delayed Goods and Services tax hike implementation will provide the necessary boost for the revival of private consumption with overall sentiment remaining positive for the year ahead, according to RHB Research.
Finance Minister Heng Swee Keat announced in his budget address that the GST will be hiked from 7% to 9% in the early part of 2021-2025 to support the government’s various infrastructure projects and social welfare programmes.
“We believe this is the right move, as any rise in private consumption would be offset by a declining labour force, an as-yet-uneven economic growth, and higher interest rates in the near term,” said RHB analyst Shekhar Jaiswal.
The revival in private consumption is also poised to be supplemented by the SG bonus paid out in $100-300 hong bao for every eligible Singaporean aged 21 and above.
“The delay in the GST hike, coupled with the deferment of a foreign workers’ levy increases for the marine shipyard and process sectors, indicate that the Government still has a bias on the dovish side as we enter the 10th year of the current growth cycle,” added Jaiswal.
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