Government Doesn’t Need to Return Reserve Funds But GST Still Has to Raise by 2025

By now, you should know that the $600 you received from Ah Gong in April doesn’t fall from the sky—part of it is from the past reserves that the Government has been accumulating for years.

In total, due to COVID-19, the Government has spent $92.9 billion to ensure that we still have our jobs and can still buy bubble tea, and $52 billion is from the past reserves.

Back in 2009, during the global financial crisis, the Government took $4 billion from the same piggy bank and managed to return it.

But with $52 billion (God knows if there’d be even more withdrawals)?

That’s going to be a tough nut to crack, unless each COE balloons to $1 million and GST is at 88%.

Fret not; there’s no legal requirement for the Government to return the money.

Government Doesn’t Need to Return Reserve Funds But GST Still Has to Raise by 2025

Go to any Facebook post and you’d see anti-establishment Facebook users saying this: “If Ah Gong gives you a chicken wing, they’ll take back the whole chicken.”

That’s very true about your boss, but not the Government.

At least, according to the laws.

Deputy Prime Minister Heng Swee Kea, who’s also the Finance Minister and our current Prime Minister in a parallel universe whereby COVID-19 didn’t occur, said in Parliament today (5 June 2020) that there is “no legal or constitutional obligation” for the Government to return the money back to the piggy bank.

However, they’d do their best to rebuild the funds.

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He said, “So how long would it take to build this back? We cannot be definitive. But rest assured that we are committed to rebuild not just our reserves, but also to continue developing Singaporeans and building Singapore.”

Unlike the 2009 financial crisis, in which President S. R. Nathan signed the cheque, this crisis is much different: it is of a “significantly larger scale and reach.” DPM Heng added, “We are facing huge uncertainties regarding the course of the pandemic and its economic and social implications.”

Very true; some people might have forgotten the 2009 crisis but I bet my boss’ Mercedes that no one would ever forget COVID-19.

But.

That doesn’t mean the plan to raise GST has been scrapped.

GST Raise Still Needed

Back in 2018, DPM Heng had then announced that GST will be raised from 7% to 9% sometime between 2021 and 2025.

That’s not changed, except that the raise won’t occur in 2021.

You can watch this video on why the raise is needed:

The Government is, however, prepared to cushion the impact when the GST raise is implemented; a $6 billion has been set aside to offset at least five years’ worth of additional GST expenses for the majority of households, and more for lower-income families.

That was announced in this year’s first Budget, when $6 billion sounds like a lot of money.

You can read more about Singapore’s past reserves here, and the impending GST raise here.

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