WP alternatives to GST hike not summed up, GST hike among options needed to meet funding gap: DPM Wong

SINGAPORE – A proposal that the goods and services tax (GST) hike should be postponed due to current inflationary pressures will not be supported, Deputy Prime Minister Lawrence Wong told parliament on Monday.

Government support measures He said it would delay the effects of the hike by at least five years for most households in Singapore.

Targeting low- and middle-income households rather than broader demographics would also minimize additional inflationary pressure, he added.

“We designed the overall package so as not to inadvertently cause inflation or stifle aggregate demand, which is the appropriate macroeconomic stance to adopt at this point,” he said.

Summing up the debate on the GST (Amendment) Bill voiced by 15 parliamentarians, Mr Wong countered. An alternative proposed by Labor MPs Louis Chua and Jamus Lim (both Sengkang GRC) These would mean spending more from past reserves and leaving less for the future, he said.

The government is also exploring other sources of income and still needs to raise the GST, he said.

Why raise GST now?

The government has carefully considered raising the GST and has determined that it is necessary to do so given that Singapore’s economic challenges are not of a short-term or cyclical nature.

The ongoing war in Ukraine, energy and food supply disruptions, rising geopolitical tensions and supply chain fragmentation are realities that Singapore will likely have to deal with for the longer term, he added.

“The international economic landscape has fundamentally changed,” he said.

Inflationary pressure continues He added that while inflation is expected to ease here in the second half of next year, inflation is unlikely to return to the levels of the past decade.

This is why the government has provided comprehensive support to Singaporeans, especially low and middle income people.

At the start of the debate, Wong had announced a $1.4 billion increase to the household aid package to offset the impact of the GST hike amid rising inflation. This means that the value of the guaranteed package will go from $6.6 billion previously to $8 billion.