SINGAPORE — With the impending hike of the Goods and Services Tax (GST) next year, Mr Lee Hsien Yang (LHY) asks if the dire warning from Prime Minister Lee Hsien Loong about “profligate spending and irresponsible, unsustainable plans” leading to the need to raise GST has come true.
The former Singtel CEO and Chairman of the Civil Aviation Authority of Singapore commented in a Facebook post on Monday evening (5 Dec), noting that the GST will be increased in another few weeks.
LHY wrote, “The PAP (People’s Action Party) government will raise GST by 14.3% (from 7% to 8%) with another similar rise a year later, making a total increase of 28.6%.”
Deputy Prime Minister and Finance Minister Lawrence Wong had earlier announced in February this year that the 7 per cent GST will be raised by two per cent in two stages, starting with one per cent to 8 per cent starting from 1 January next year and another one per cent to 9 per cent from 1 January 2024.
GST Has To Be Raised Because PAP Govt Has To Spend
A debate was held last month in Parliament over the hike of GST, with Members of Parliament from the opposition parties, Workers’ Party (WP) and Progress Singapore Party (PSP) voting against the bill.
“No matter the compelling and reasoned economic arguments against this rise, no matter the appeals for compassion and the pleas to delay. The PAP government needs to spend, and therefore Singaporeans must pay, that is essentially its explanation for going ahead,” wrote LHY.
“They say trust us when we say this package is sufficient, that grants will help, that vouchers will keep the poor afloat. They say believe us when we say any public spending beyond these fiscal rules means drawing on the past reserves, which leaves behind less for the next generation.”
LHY pointed out that Singapore’s fiscal position for Financial Year 2022 includes a Net Investments Return Contribution (NIRC) of S$21.6 billion, yet the public is told that the country is still at a budget deficit of S$5.4 billion for the year.
“How are we to trust figures which are shrouded in secrecy? When meaningful detail and transparency remain frustratingly elusive, and any attempt to obtain clarity is met with obfuscation and condescension, the questions must keep coming,” asks LHY.
LHY wrote, “We are told the NIRC is limited to a maximum of 50% of net investment returns on the reserves. 50% is self imposed and arbitrary. It was set by parliament several years ago.”
“Likewise, it can be changed by a super majority in parliament. Since 9 Aug 1965, the PAP government has amended the Singapore constitution 52 times,” argued LHY.
In 2009, the Parliament passed a bill to amend the Singapore Constitution to introduce NIRC to allow the Government to draw on more of the investment returns from the Singapore reserves for spending with a broader definition of investment returns.
WP’s position on the GST hike is that the Government need not raise the GST as there are other options for raising revenue, such as managing revenue shortfall and easing the rules to allow for a greater NIRC from the government’s investments or allowing for a partial contribution from land sales to the Budget.
However, PAP MPs have lambasted WP’s alternatives as unfeasible or a raid on the past reserves.
LHY asks, “How large a reserve would be enough? Why must cash from land sales of all leasehold land that reverts back to the state be excluded from revenues? Why must GST be raised?”
“Quite apart from how the numbers are calculated, government spending needs to be prudent and wise. Equally, the custodians of our monies need to invest with rigorous care. And there needs to be full transparency, and accountability.”
Has The Dire Warning From PM Lee Come True?
In the 2015 General Election, PM Lee said that the PAP would be “mad” to raise taxes just because it had garnered a certain percentage of the votes.
This was in response to a suggestion by former WP Secretary-General Low Thia Khiang during a WP rally that the PAP might increase the GST if it gets an overwhelming majority of seats.
“Raising, adjusting taxes is a very big decision. You consider it carefully, you discuss it thoroughly, and you do it only when you absolutely have to,” said PM Lee.
He added, “What will make you need to raise GST? Profligate spending and irresponsible, unsustainable plans. That is what will hurt and require you to raise taxes and GST.”
LHY, in his Facebook post, ask, “Could this dire warning have indeed come true?”
The younger brother of PM Lee and son of late Lee Kuan Yew, who joined PSP in 2020, had earlier written in a separate Facebook post three years ago, “Today’s PAP is no longer the PAP of my father. It has lost its way”
