PM Lee Echoes Finance Minister Heng Swee Kiat’s Admission That Raising Taxes “Is Not A Matter of Whether, But When”
The last time Singapore saw a rise in our Goods and Services Tax (GST) was in 2007 from 5% to 7%. However, that pesky 7% may be further increased in the near future.
Speaking at the People’s Action Party (PAP) convention, Prime Minister Lee Hsien Loong echoed Finance Minister Heng Swee Kiat’s admission that “[The Singapore Government] will have to raise revenues through new taxes or raise tax rates”, during the latter’s 2017 Budget speech earlier this year.
Higher-than-expected economic growth, but even higher spendings
Despite admitting that Singapore might exceed the projected economic growth of 2-3%, PM Lee argued that the expenditure for investing in infrastructure for the future “are costly”. The incumbent PAP leader likened the investments to growing trees that will provide shade for the future generations.
In order to raise the sum for these investments, it seems that the government has little choice but to increase the GST. According to an ST report, the amount of GST collected in the Fiscal Year 2016 amounted to approximately $10.9 billion, nearly “15.8 per cent of [the government’s] total operating revenue”.
While the increase in taxes seem certain, PM Lee was less clear about how the money will be spent other then the fact the “our spending needs to grow”. So what will our money be spent on?
Well, according to ST, it seems that part of the revenue generated from taxes will be spent on infrastructure, so as to “benefit everyone, young and old”. And at the same speech, PM Lee spoke of four specific developments that the government is working in the near future.
1. To improve train reliability
Arguably one of the most pressing needs, funds will be used to ensure that the future generations will never have to encounter a situation where at least three trains lines breakdown in a single day.
With train disruptions nearly occurring on a weekly basis, Singaporeans will be keen to see a marked improvement in service reliability. However, they probably won’t be as keen on the fact that the increase in reliability will have to come out from our own pockets.
PM Lee proclaimed that even though we have “a first class transport system in Singapore”, the government wants it to “be even better”.
He added that funds are also needed to finance future MRT lines such as the Thomson-East Coast Line, the Cross Island Line, and the Jurong Region Line.
2. Train to Malaysia
On top of our internal train lines, Singapore will be building two train lines to neighbours Malaysia. The first of these lines is the Rapid Transit System (RTS) between Singapore and Johor’s Bukit Chagar. Slated to open by 2024, the RTS will be able transport up to 10,000 passengers an hour in each direction.
If that isn’t exciting enough, there are also plans to build a High Speed Rail (HSR) which will connect Jurong East to Kuala Lumpur. In the midst of discussions and land acquisitions, the KL-Singapore HSR is supposedly able to cut travel time by approximately 90 mins.
Here’s the rough route of the HSR.
Given that a CEO for the train lines has yet to be announced, we wonder if we could volunteer ourselves for the post.
3. The second CBD
Another large chuck of funds will be ploughed into Singapore’s second Central Business District (CBD). Located in Jurong, the Jurong Lake District promises to create 20,000 new homes and more than 100,000 new jobs.
Future Jurong Lake District residents will be able to look forward to the HSR terminus which will be located in Lakeside. JLD is projected to be completed by 2040.
4. Changi Airport 5 and Tuas mega port
The final bit of investment will be channeled into ensuring that Singapore remains a competitive travel hub and entrepôt.
It is no secret the Changi Airport is one of the world’s best airport. However, in order to maintain it’s attractiveness as a travel hub for Asia, Changi Airport Group will be building it’s fifth terminal that will be nearly 10 times the size of Vivocity.
When fully operational in the late 2020s , Terminal 5 will be able to accommodate 135 million passengers per year — making it the third largest terminal behind Dubai and Beijing.
In addition, the government will be expanding its sea port capabilities by creating a Tuas mega port. Singapore is a well-known to be one of the busiest ports in the world, but PM Lee cautioned against complacency in a Facebook post on 16 Oct.
The PM said that the opening of “new trade routes” coupled with the competition from other ports in the region, threaten Singapore’s success as a port. The construction of the Tuas mega port, which will be the new Port Authority of Singapore’s headquarters, would help ensure that Singapore remains an international maritime hub. The port is targeted to be completed by 2040.
Calling for trust
Although, PM Lee did not explicitly tie the increase in GST to the government’s expenditure on these infrastructures, it is hard not to draw the connection.
Throughout his entire speech, PM Lee called for Singaporeans to trust in the government and the PAP. He argued that understanding the need and helping to generate funds for such investments serves as a “vote of confidence in Singapore’s future”.
In addition to infrastructure, PM Lee also suggested that the government will spend more on economic restructuring, pre-schools, and healthcare.
Featured image from Facebook.