Explore other revenue streams, hold off GST hike as far as possible, MPs propose

SINGAPORE — While some Members of Parliament (MP) supported the “advance notice” on the impending Goods and Services Tax (GST) hike, others urged the Government to delay raising the tax and to look into other ways to raise revenue.

The GST was among the major topics raised during the first day of the Budget debate in Parliament on Tuesday (Feb 27), with about a third of the 28 MPs speaking on the matter. The tax is set to rise from 7 to 9 per cent some time between 2021 and 2025, in order to raise revenue and maintain the spending on healthcare, security and other social needs.

Mr Lim Biow Chuan, MP for Mountbatten, noted that the Government announced this at least three years in advance. “In my view, it is fair and prudent to take longer-term views of the needs of the country… If the increase in GST would help reduce the healthcare burden on all citizens, if it helps subsidise transport costs, if it provides more care for the lower-income (group), it should be something that we should all support as we are helping the majority of Singaporeans,” he said.

Having said that, he asked Finance Minister Heng Swee Keat whether a committee to combat illegal profiteering from the GST hikes would be set up before the GST increase takes effect.

Mr Liang Eng Hwa, MP for Holland-Bukit Timah GRC, said that giving notice of the change “way ahead of time” allows Singaporeans and businesses to prepare for the increases. It will also give the Government time to work on schemes to ease the strain on lower-income households.

MP for Ang Mo Kio GRC, Mr Darryl David, also urged the Government to continue its policy of ensuring that those in the lower-income bracket receive a corresponding increase in tax transfers and subsidiaries.

Among the MPs who spoke, some would like the tax increase to be held back for as long as possible.

Ms Foo Mee Har, MP for West Coast GRC, suggested that the Government review the need for a GST hike if Singapore’s economy continues to outperform the forecasts and generate recurrent budget surpluses in the coming years. This is against the backdrop of world economies making a recovery and the shift in global economic weight towards Asia, which brings about significant opportunities for firms and Singaporeans.

REVENUE FROM OTHER FORMS OF TAXES

Ms Foo urged the Government to continue studying all other possible streams of revenue, including expanding the scope of GST to cover the e-commerce market, raising gambling tax rates and introducing a sugar tax, for instance.

Other MPs, such as Mr Chong Kee Hiong (Bishan-Toa Payoh GRC), raised several questions about the hike, including whether the Government would consider postponing it beyond the projected time frame if the economy performs better than expected in the future.

Given that a significant portion of the national budget is likely to go into infrastructure projects, such as Changi Airport’s Terminal 5, he questioned how much these will contribute towards the gross domestic product, and how such contributions would go towards reducing Singapore’s reliance on future GST increases.

Mr Chong also asked if there could be a cap on the proportion of GST contribution to the nation’s total revenue, and whether a ceiling should be set on the GST rate in the future.

“I agree with our Government’s decision to keep our GST at one flat rate to minimise administrative and compliance costs. However, going forward, should our GST continue to increase, we should review and examine other GST models with lower rates on essential goods and services to reduce the burden on the lower-income groups,” he said.

Mr Chong added that the Government has to take into account the pace of wage increases and projected inflation rate, “so as to reduce the impact of the increase in the cost of living on our citizens”.

Those affected would also include consumers and companies, and some MPs such as Dr Lee Bee Wah (Nee Soon GRC) reminded the House that there were businesses raising prices after the announcement at last year’s Budget of a water tariff hike, even before the increases have kicked in fully.

“I hope the Government can look into a taskforce to ensure commercial entities do not use the GST increase as an excuse to exploit consumers,” she said.

Nominated MP Thomas Chua said that some smaller retailers, particularly from the northern part of Singapore, are worried that consumers will head north into Malaysia to shop for daily products following the hike.

As the Singapore-Johor Rapid Transit System Link will begin operating in 2024, and the Singapore-Kuala Lumpur High Speed Rail is projected to operate by 2026, the retailers find it “very likely” that consumers will have more convenient ways to travel there, Mr Chua added.