SINGAPORE, Jan 1 — With Singapore's economy emerging from the Covid-19 crisis, the government has to “start moving” on the planned increase in the Goods and Services Tax (GST) from 7 per cent to 9 per cent, said Prime Minister Lee Hsien Loong yesterday (December 31).
The Budget statement on February 18 will, therefore, lay the basis for “sound and sustainable government finances for the next stage of Singapore’s development”, Lee said in his New Year message.
The prime minister reiterated that Singapore needs a vibrant economy to generate the resources it needs to realise its goals.
In addition, the government must have reliable and enough revenues to carry out its social programmes.
“It needs to raise additional revenues to fund the expansion of our healthcare system and support schemes for older Singaporeans. Those who are better off should contribute a larger share, but everyone needs to shoulder at least a small part of the burden,” Lee said.
He noted that this is the rationale behind raising a broad-based tax such as the GST, which would be coupled with a comprehensive scheme of offsets to cushion the impact on lower-income households.
Adding that the government has seen this need coming for some years, Lee said: “Now that our economy is emerging from Covid-19, we have to start moving on this.”
Lee said that Singapore's system would remain progressive and fair, with the GST forming an important component of its system of taxes and transfers, which also includes income and wealth taxes.
In 2018, Heng Swee Keat, then Finance Minister and now Deputy Prime Minister, announced plans to raise the GST from 7 per cent to 9 per cent sometime between 2021 and 2025. The proposed increase was later delayed to between 2022 and 2025 because of the pandemic.
In this year's Budget statement, Heng said that the government could not put it off for too long, and would have to do so “sooner rather than later, subject to the economic outlook”.
Budget 2022 will be delivered by Lawrence Wong, his first since he was appointed Finance Minister in May this year.
'Time of transition'
In his New Year message, Lee also said that with Singapore's economy rebounding steadily, he expects 2022 to be a “time of transition” for Singapore as it further opens up international travel and reconnects with the rest of the world — if the Omicron Covid-19 strain permits.
Setting out the goals for the country in the near and longer term, Lee said that Singapore would also press ahead with bringing in migrant workers and ensuring that workers from abroad feel welcome here and can complement the Singaporean workforce.
“Our economy is recovering steadily. Barring fresh disruptions, it should grow in step with global economic recovery.”
Singapore’s economy is expected to expand by 3 to 5 per cent in 2022.
As businesses get back on their feet, emergency support will be phased out progressively, though “a few sectors will take longer” to recover, said Lee.
In the longer term, Lee said that the authorities would continue transforming industries, and help companies restructure and workers upgrade their skills.
Singapore will also seek out new areas of growth, including in the digital economy and the green economy, which involves the development of products and services that will achieve positive environmental outcomes.
These will build on Singapore’s Smart Nation drive that seeks to transform the way the country does things by tapping the possibilities that technology offers, and on the Singapore Green Plan, which sets targets to help Singapore become more sustainable and manage greenhouse-gas emissions.
In the meantime, the fight against Covid-19 continues, with the highly infectious Omicron variant bringing fresh uncertainties.
But Lee reiterated that Singapore was in a stronger position than two years ago with booster shots being rolled out and vaccinations under way for children below 12.
“We have also learnt to better manage the public health challenges, while minimising the hit on our economy,” he said.
“As we brace ourselves for the impact of Omicron, we can be quietly confident that we will cope with whatever lies ahead.”
The country’s immediate tasks, however, go beyond managing the pandemic as the government keeps an eye on areas such as spurring growth and creating jobs in a post‐pandemic economy.
Much of this will hinge on a stable global and regional environment, particularly ties between the United States and China.
“The differences between the two powers remain many and deep, but their recent high‐level engagements and practical cooperation on climate change are encouraging,” said Lee.
“For our part, Singapore will continue engaging partners near and far. We will continue to pursue trade liberalisation and regional integration for the benefit of our people, including through the Regional Comprehensive Economic Partnership, which comes into force on the first day of 2022.”
The economic partnership is the world's largest trade bloc.
Seven Southeast Asian nations — including Singapore — as well as Australia, China, Japan, New Zealand and South Korea ratified the pact earlier this year.
Looking back on 2021, Lee commended Singapore’s sportswomen and sportsmen for their achievements.
First, swimmer Yip Pin Xiu bagged two swimming golds at the Tokyo Paralympic Games.
Then pool player Aloysius Yapp and bowler Shayna Ng reached the top in global competitions.
Lee also praised shuttler Loh Kean Yew for making history as Singapore’s first world badminton champion and the country’s footballers for their grit and determination at the recent Asean Football Federation’s Suzuki Cup, where they bowed out in the semi-finals.
“In these challenging times, Team Singapore has inspired us with their tremendous spirit and done us proud,” he said.
‘Crucible of fire’
As Covid-19 rages on, Lee said that the pandemic has been a “crucible of fire for this generation of Singaporeans”.
Adding that it would not be the last crisis facing Singapore, Lee said that the country would face more trials ahead.
“We must strenuously resist powerful external tidal pulls that will strain fault lines in our society, and not allow them to divide us.
“As successive cohorts come of age with new perspectives and expectations, our societal norms will evolve,” said Lee, stressing that this must be dealt with cautiously. ― TODAY