Despite the increasing tax revenue, the government will still be moving forward with the GST hike.
I can already hear the tears and the hollow piggy banks.
But fret not, the government will be assisting in offsetting the GST hike for households and most of them will not even feel the impact for at least five years, lower-income household may not even feel it for about 10 years.
Lest you’ve forgotten, the increase will come in two stages. It will increase from the current seven per cent to eight per cent starting 1 January 2023, and then to nine per cent one year later on 1 January 2024.
The government is also ready to spend $6.6 billion to support citizens for the two per cent increase.
The MPs have been asking if the tax hike can be delayed further as there was an increase in tax revenue for 2021.
Deputy Prime Minister and Finance Minister Lawrence Wong countered and explained that the increase of 22.4 per cent was partly because of a lower income in 2020 due to the COVID-19 pandemic.
He also mentioned that the amount received was used to fund the Progressive Wage Credit Scheme which offsets mandatory wage increases for lower-wage workers—as well as to provide short-term relief for businesses and families through COVID-19 support packages, among others.
DPM Wong also understood that the recent inflation has affected the lower-income families more and ensures that government measures have taken that into consideration.
A $1.5 billion support package was announced in June to assist lower-income families and businesses in coping with the rising living costs.
Reasons for the GST Hike
The hike isn’t coming for no reason. And it’s not because the government wants more money.
Well, actually yes, but for good reasons.
Healthcare is one of the main reasons for the hike. By 2030, one in four Singaporeans will be aged 65 and above, compared to one in seven in 2019.
The GST increase will be used to support and care for our future elderly.
Another reason is to provide better preschool education and child care support. The government is planning to spend more to provide accessible, quality, affordable childcare, and early childhood education.
Of course, there are more reasons but you get the point. The GST increase is coming to improve the lives of future citizens and our future.
If you want to find out more about why GST is important in Singapore, watch this video to the end:
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