The goods and services tax (GST) rates will remain at 7 per cent in 2021, but it cannot be deferred “indefinitely”, said Deputy Prime Minister Heng Swee Keat on Thursday (15 Oct).

Mr Heng, who is also the Finance Minister, had announced in February this year that GST rates will remain at 7 per cent in 2021 instead of increasing it to 9 per cent as originally planned.

Back in 2018, the Government had planned for a GST hike from 7 per cent to 9 per cent some time between 2021 and 2025.

“In February this year, I announced that GST rate will remain at 7 per cent in 2021,” said the Minister in Parliament yesterday.

“However, we cannot defer the GST rate increase indefinitely.”

Mr Heng explained that it is necessary to increase the GST rate in order to support the needs in healthcare and pre-school education.

“We will continue to study the timing of increasing the GST rate carefully, taking into account the pace of our economic recovery, our revenue outlook and how much spending we can defer to later years without jeopardizing our long-term needs,” he added.

This year’s GST collections are projected to drop by 14 per cent from its initial estimate before the start of the year, said the Minister, adding that it is due to travel disruptions and the impact of the circuit breaker period.

“We expect collections to continue to be lower than usual until international travel recovers fully, which we expect to be at least a couple of years away, he added.

Mr Heng also made the assurance that the Government has set aside a S$6 billion Assurance Package for GST to help Singaporeans when the rate is eventually increased.

Responding to Non-Constituency Member of Parliament (NCMP) Leong Mun Wai’s suggestion to shelve the increase indefinitely, the Minister pointed out that over 60 per cent of the net GST comes from foreigners residing in Singapore, tourists, and the top 20 per cent of resident households.

“Mr Leong’s suggestion to shelf the GST rate increase indefinitely means that we will lose the additional revenues from these groups which we can use to improve the lives of Singaporeans,” he remarked.

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