A widely expected increase in Singapore’s GST (Goods and Services Tax) this year will only take effect “sometime between 2021 and 2025”, according to the country's Finance Minster Heng Swee Keat who delivered the Budget 2018 speech on Monday.
The GST will go up from the present 7% to 9% while the hike is expected to yield government revenue of nearly 0.7% of GDP per year, he said.
"The exact timing will depend on the state of the economy, how much our expenditures grow, and how buoyant our existing taxes are. But I expect that we will need to do so earlier rather than later in the period," Heng noted.
The government will implement the GST hike in a progressive progressive to minimize the impact on lower income households, he added.
While the country had a stronger-than-expected economic performance last year on the back of a global upturn that helped yield a budget surplus of S$9.6 billion (US$7.3 billion) for the financial year ending Mar 31—Singapore’s highest in nearly 30 years, it expects rising spending which requires cautious planning.
"We cannot base our long-term fiscal planning on the basis of exceptional factors being positive, year after year," he said. “As spending on healthcare, infrastructure and security continue climbing over the next decade from 2021 to 2030, Singapore will not have enough revenue to meet its needs without taking measures to strengthen its fiscal position - both on the revenue and spending fronts.”
The Budget also includes an increase of the stamp duty on residential properties in excess of S$1 million (US$761,600), effective from Tuesday.