Singapore. Finance Minister Lawrence Wong said in his Budget Speech (18 February) that the planned increase in Good and Services Tax (GST) will not happen this year. Instead, GST will be raised in 2 steps for the next two years.
The first increase from 7% to 8% will start on 1 January 2023. Then, the second hike of 9% will start on 1 January 2024.
In his New Year message, Prime Minister Lee Hsien Loong said that the Government will need to start their planned GST hike this year.
Initially, the announcement of the GST hike in 2018 was from 7% to 9%.
Finance Minister Lawrence Wong said the GST hike is essential for supporting healthcare expenditures and for its senior care.
The decision to delay the increase in GST was due to the overall condition of the country. It has considered the country’s economy, inflation outlook, and the continuing pandemic.
“Our revenue needs are pressing, but I also understand the concerns that Singaporeans have about the GST increase taking place at the same time as rising prices,” said by Mr Wong.
“I have therefore decided to delay the GST increase to 2023 and stagger the increase over two steps. The first increase will take place on Jan 1, 2023, from 7 percent to 8 percent, and the second increase on Jan 1, 2024, from 8 percent to 9 percent,” he added.
For the Singapore 2022 budget, the Government has an additional top-up of S$640 million to the assurance package. The aim is to cushion the impact of the GST increase.
Furthermore, the Government aims to improve the Voucher (GSTV) scheme. The Assurance Package and the GST Voucher (GSTV) scheme will be applied before the GST increase for the benefit of Singaporeans.
There is a S$6.6 billion assurance package to offset at least five (5) years of additional GST expenses for most Singaporean households. Moreover, those under low-income households are entitled to offsets that cover about ten (10) years’ worth of additional GST expenses.
Under the enhanced S$6.6 billion assurance package
- Every adult Singaporean (21 years old and above) will receive between S$700 to S$1,600 cash pay-out over the next 5 years (starting 2022).
- Eligible households will receive between S$330 to S$570 additional GST Voucher (GSTV) – U-Save rebates for the next 4 years (starting 2023).
- Eligible seniors (55 years old above) will receive between S$600 to S$900 GSTV – cash (Senior’s Bonus) for the next 3 years (starting 2023).
- All Singapore households will receive a total of S$400 Community Development Council (CDC) vouchers (in 2 tranches – S$200 each year) over 2023 and 2024 to be used on participating heartland merchants, hawkers, and major supermarkets.
- Singaporean children (20 years old and below) and seniors (55 years old and above) will receive a Medisave top-up of S$450.
This is provided for lower and middle-income Singaporean households.
- Eligible Singaporeans will receive up to S$500 GSTV-cash pay-out.
- The Assessable Income Threshold is to increase from S$28,000 to S$34,000 for GSTV-cash that will benefit more Singaporeans.
- The Service and conservancy charge rebate is the new component of the GSTV scheme on top of Cash, MediSave, and U-Save.