DBS Senior Economist Predicts Rise After PM Lee’s Statement About The Government Spending
It’s time for Singapore to become more expensive again. Show of hands, anyone surprised? Were you actually even expecting otherwise? After all, Prime Minister Lee Hsien Loong had already stated that Government spending will only rise further as we move ahead.
Lo and behold, it looks like the Goods and Services Tax – or GST – will be increasing come 2018.
It was only a matter of time, really.
Forewarned by PM Lee
At the PAP’s Convention on 19 Nov, PM Lee had hinted that Singapore was about to get more expensive.
During his speech, he touched on the costliness of investments and social spending and how it was inevitable for spending needs to grow. He added that the Government spending will only increase as time goes by.
So Heng Swee Keat was right when he said that raising taxes is not a matter of whether, but a matter of when.
True to his words, it seems like that will happen really soon.
GST likely to be raised by 2 percent
On Wednesday (29 Nov), The Straits Times reported that DBS senior economist Irvin Seah suggested the GST will likely be raised by two percent in Budget 2018 due to Singapore’s increased spending needs.
We use the term “likely” loosely because they probably wouldn’t have reported it if it wasn’t already going to happen.
If that wasn’t enough, Mr Seah is expecting a staggered hike to be implemented over two years in order to “cushion the impact on households”.
Why target the GST instead of others?
If you’re upset after reading that, we suggest you close the article right now — because the reason why GST is targeted will only make you even more angry.
According to Mr Seah, it’s unlikely that corporate tax rates will be increased due to the need for Singapore’s economy to remain competitive. Personal income tax rates for top-income earners – or the “rich people who can actually afford living here” – will also not be touched due to it having being recently adjusted.
That just leaves tax revenues to GST I guess.
The GST is perhaps the most direct and effective tool in terms of raising tax revenue. It has a relatively broader tax base and it is also the second-largest source of revenue, just behind the corporate income tax.
Why? Because Singapore. That’s why.
Didn’t the Government previously promise not to increase the GST?
Yes, they did.
In case you forgot, here is what the Government posted on August 2015.
Furthermore, during the 2015 Budget Statement, DPM Tharman Shanmugaratnam had also stated that revenue measures undertaken by the Government will be sufficient for the increased spending planned for the rest of this decade.
In fact, this is what he said:
We have prepared ourselves in advance and that must remain the way in which we plan for our budgets in the decades to come.
So why the change now? Because Singapore. That’s why.
Welcome to Singapore
What are your thoughts on this? Are you surprised? Or have you been expecting this already?
We for one, have nothing to say about except the following:
What to do?
Featured image from 123rf.com