Finance Minister Heng Swee Keat said on Thursday (28 February) that the Government has yet to decide the exact timing of when the planned Goods and Services Tax (GST) will be increased from 7 per cent to 9 per cent. However, he ensured that the Government will exercise care in doing so.

“We will continue to monitor the prevailing economic conditions, spending trends and the buoyancy of our revenues carefully,” he explained.

He also added that when the hike do kick in, the Government will be sure to provide a transitional support package to help citizens cope.

In a speech responding to 55 MPs who spoke over three days, Mr Heng acknowledged the reservations that some had over the approach and timing of the GST hike, which was announced in last year’s Budget and is predicted to take place in some time between 2021 and 2025.

Ms Foo Mee Har (West Coast GRC) had requested the Government to put hold of the planned increase for as long as possible, suggesting that the funds kept in this term of the government as well as the decision to use government debt to finance infrastructure could provide some leeway to postpone the hike.

However, Mr Heng explained that the hike is crucial as funds are needed in healthcare and other areas.

Just in 2019, the Health Ministry is expected to spend S$6.1 billion to subsidise patients bill through existing permanent schemes enjoyed by all Singaporeans, he noted. This does not include the further spending to boost healthcare facilities and medical research. As such, the base of healthcare spending has risen.

“As our population ages, spending on permanent healthcare schemes and other parts of the healthcare system will continue to increase structurally. Funding this requires a structural increase in our operating revenues,” he expressed.

Therefore, a GST hike is necessary to aid this structural increase in healthcare, among other critical needs like pre-school education and security, he said.

Workers’ Party (WP) MP Low Thia Khiang (Aljunied GRC) questioned on how long this structural increase will last since the biggest ageing demographic now is the Merdeka Generation, and they will eventually decrease in number over time.

As a response, Mr Heng said that although the medical doctors in the House would not be able to give an exact answer to Mr Low’s, the Government is carefully studying the variables that affect life expectancy and treatment cost structures.

“All I can say is that it is going to last for quite a number of years,” he said.

Responding to Mr Liang Eng Hwa’s (Holland-Bukit Timah GRC) speech on the role of surpluses accumulated in this term of government, Mr Heng explained that the monies will be reinvested into the national reserves, and half of the long-term returns from the reserves can be spent in future Budgets as part of the Net Investment Returns framework.

These contributions to the reserves are the Government’s obligations to prepare for future uncertainties. “Any surpluses we have do not simply disappear at the end of the term,” Mr Heng cited.

Upon reading Finance Minister’s points, netizens began predicting when the Government will increase GST to 9 per cent. Over 200 comments regarding this topic were received on The Straits Times Facebook page.

Some netizens are still requesting the Government to not increase GST as cost of living for them is high enough already.

The current government has said that the GST hike will be taking place sometime in between 2021 and 2025.

Considering election is predicted to happen in the near future, why is the current administration planning such an increase for the next government?

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