GST may rise by 2% at Budget 2018: DBS forecasts

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Singapore’s Good and Services Tax may rise by 2%, according to a report released today by DBS. According to DBS Senior Economist Irvin Seah, this projected rise in the GST will come at a time when Singapore has “registered three consecutive years (including FY17) of deficit in the primary balance, which is unprecedented.”

Seah added:

“Continuously widening deficits are not sustainable. This explains the need to find new sources of revenue and/or lower spending.
“The fiscal policy will become even more challenging as the population continues to age. This means social expenditure will need to rise at an even faster pace than in recent years. And there is also the need to continue to invest in infrastructure and human capital to sustain Singapore’s long-term competitiveness.
“Higher expenditure will challenge the fiscal position unless more revenue can be generated, especially given the Net Investment Returns Contribution limitations. This also explains why the government had to price scarce resources more efficiently (e.g. water price hikes), tap on new sources of tax revenues, as well as reduce operating expenditure. Beyond that, hikes in tax rates will be inevitable.”

Asserting that a GST hike is inevitable given the economic situation Singapore is presently in, Seah forecast that the chances are high that the GST will be increase by 2% at Budget 2018. This has been the norm over the past 2 cycles, he added.

The economist also postulated that the GST increase may be implemented in a staggered manner, likely over a term of two years:

“While GDP growth in recent quarters has been encouraging, the economy has just emerged from two consecutive years of slow growth. And pockets of uncertainties remain in the external environment, which could pose risks to Singapore’s economic performance in 2018. Moreover, though the labour market has bottomed, a more pronounced recovery remains visibly lacking. The job vacancy to unemployed person ratio remains below one, meaning that there are still more unemployed persons than job vacancies available in the labour market. Hence, introducing a sharp GST hike at this moment could result in a double whammy for some workers/households.

“To balance the fiscal need and the economic conditions at present, the forthcoming GST hike will likely be implemented in a staggered manner, with the 2%-pt increase to be introduced over a two-year period. This will lessen the impact on households and if combined with an effective offset package, will minimise pain to certain segments of the society.”

Seah further forecast that the GST hike could be coupled with a tightening in monetary policy by the Monetary Authority of Singapore (MAS) next year, along with an offset package of at least $4 billion “to cushion the impact on consumers, particularly on lower-income households.”

Such an offset package is expected to more than cover the projected amount of tax revenue derived from the GST hike, according to Seah.

Read the full DBS report here.

Incensed netizens condemn high ministerial salaries as PM Lee confirms impending tax hike

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30 comments

  1. Xi Jinping’s salary is only US$22,000 per annum.

    Donald Trump choose to donate his salary.

    Other world leaders’ salary is below US$400,000

    That makes our politicians the highest paid in world.

    Indeed we are number 1 many areas including the highest paid government officials!

  2. Ya only know how to squeeze from the people. Damn heartless, no inner soul, killing the poor n middle income. There they LOST TRILLIONS. What have they done to the people…..any profits since under them???? Not stop increasing things….Why don’t THEY just reduce the salaries to 50% n get ONLY 1 month bonus??? With the amount, can help many ways. U heartless people. Not that people want to CURSE ALL OF U!!!!!!! Really hope that OUR PRAYERS are answered. HEAVEN n EARTH to take ACTIONS at the SOONEST time to ALL without inner soul.

  3. Ryan Lee says:

    The PAP pay themselves extremely high salary plus obscene bonuses.

    Ho Jinx loses money on investments like it’s nobody business yet can still travel freely with her sissy husband while drawing salary paid for by the people.

    End of the day we are the one paying for all of it. Thank you very much PAP supporters.

  4. Ronald Lim says:

    This government under LHL is bankrupt of ideas. Raising GST which has been recognised as a regressive tax goes to show they do not care for the common people, despite their GST vouchers and handouts (which is just another means to secure votes). Raising GST hurts the common people most as it is a sure way to increase the cost for living.

  5. Ace Chew says:

    NORM?!!! Another mouth piece giving the prelude of what is coming. Advice for the whites, why not increase GST to 50% then you guys won’t have to come up with nonsense scripts year after year. Increase COE to $200k minimum. Increase HDB 5 room flat to $1M minimum. Increase bus fare to $10 per trip. Increase petrol price to $50 per litre. What is stopping you from doing all these. Do it pls.

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