Singapore’s New GST Plan: A Balancing Act Amid Rising Inflation
Deputy Prime Minister Lawrence Wong announced on Friday, Oct 14 that the government will tweak its $6.6 billion support package to better match the hotter-than‑expected inflation world. The tweaks are due to surface in Budget 2023, amidst a series of measures aimed at easing the price burden on everyday Singaporeans.
Why the GST Hike Matters
The Goods & Services Tax will climb in two steps: from 7 % to 8 % on Jan 1, 2023, then to 9 % on Jan 1, 2024. This incremental rise is designed to channel extra revenue into growing public spending.
Wong, who also wears the Finance Minister hat, stresses that the government is committed to smoothing the transition. “Doing this now and seeing the tax bump on higher‑income folks—people, tourists, companies—helps us fund healthcare and social programmes,” he said.
The Assurance Package in Action
- Cash payouts for every adult—think of it as a safety net swing for your wallet.
- GST voucher cash payouts tailored for lower‑income seniors—ensuring the ones who’ve worked hard get a little extra relief.
- U‑Save rebates for roughly 950,000 households—another way to cushion that tax shock.
These measures are set to protect the majority of households for at least five years and lower‑income families for about ten years. But as inflation stubbornly refuses to return to the “low‑low” rates we’ve lived with for a decade, the package will be reviewed to keep up with reality.
Inflation: The Wild Card
Wong acknowledges that while inflation might soften by the second half of next year, it will never be the same quiet price floor we’ve seen before. “The new normal is going to be a higher rate of inflation than what we’re used to,” he warns.
He also highlights the unpredictable factors at play: the ongoing conflict between Russia and Ukraine could stretch longer or new supply chain hiccups might keep prices elevated. “We’re dealing with an uncertain inflation outlook, but our spending is as predictable as a rising tide,” he adds.
Bottom Line
The government is moving forward with the GST increase, but it’s keen on keeping the impact manageable—especially for mid‑and lower‑income households. While higher‑income Singaporeans and visitors shoulder the tax load, the funds will then flow into vital health and social services.
Stay tuned for the full Budget 2023 for all the nuts and bolts of this plan. This story originally appeared in The Straits Times. Permission required for reproduction.
