The Government says there is “no basis” to claims that it intends to raise the Goods and Services Tax (GST) after the upcoming general elections, which is widely expected to be held in September.
“There is no basis to these claims, and they are inconsistent with what the Government has recently stated,” a statement posted on the Government website on Thursday said.
Some other websites had reported the possibility of the consumption tax being raised from the present 7 per cent to 10 per cent to fund government social programmes.
The Government statement said that DPM Tharman Shanmugaratnam had, in his Budget statement earlier this year, stated that the revenue measures the Government “had already undertaken will provide sufficiently for the increased spending planned for the rest of this decade.”
It said some of these measures, for example, involved the inclusion of Temasek in the Government’s Net Investment Returns (NIR) framework from 2016 onward, and the increase in the top marginal rates for personal income tax from Year of Assessment 2017.
“These measures came after moves in recent years to make Singapore’s property tax rates more progressive, with significantly increased tax rates for high value residential properties, offsetting reduced tax rates for lower value homes,” the Government said.
“With the change to incorporate Temasek in the NIR framework and the other tax changes I have introduced, in particular the increase in the personal income tax rate, we will be in a good position for at least the rest of this decade,” it added.
The speculations of a GST hike perhaps stem from what Prime Minister Lee Hsien Loong himself said in his 2012 National Day Rally speech.
Mr Lee had said then that the government was looking to build “an inclusive society” and that social programmes would have to be paid for.
“As our social spending increases significantly, sooner or later, our taxes must go up,” he said. “Inclusiveness doesn’t just mean more good things from the state or falling from heaven.”
Mr Lee said that “[as] spending increases significantly, sooner or later our taxes must go up – not immediately, but certainly within the next 20 years.”
“Whoever is the government will at some point have to raise taxes because the spending will have to be done and the spending will have to be paid for,” he said.
With many social programmes having been introduced since the last elections, questions have been raised about how these would be paid for.
Mr Tharman had promised prior to General Election 2011 that the GST would not be increased for “at least the next five year”.
The GST was introduced 21 years ago in 1994, and was last raised by 3 per cent to its current 7 per cent.