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To Justify GST Hike, Emphasise Universal Benefits

21 Feb 2018

The announcement in Budget 2018 that the goods and services tax (GST) will be increasedfrom 7 per cent to 9 per cent between 2021 and 2025 was not much of a surprise. But the fiscal context in which the announcement was made has complicated the Government's task of persuading Singaporeans of the necessity of the increase.

First, the surplus for financial year 2017 is now estimated at $9.6 billion - more than five times the original estimate of $1.9 billion - which is almost large enough to finance a large ministry such as the Ministry of Health.

Despite the Finance Minister's explanation that this larger-than-anticipated surplus was exceptional and unlikely to be repeated, people may ask how certain the Government is that spending needs will increase in 2021-2025 by an amount large enough to justify a fairly significant hike in the GST.

Donald Low

Associate Dean (Research and Executive Education) at the Lee Kuan Yew School of Public Policy