Singapore GE2025: Where political parties stand on tax, housing and foreign talent ahead of the election

SINGAPORE, Apr 23 — As Singapore gears up for its next general election, political parties are setting out contrasting ideas on key national issues such as fiscal policy, cost of living, housing and foreign manpower.

The Straits Times reports that while manifestos and campaign speeches will play a role in shaping voter decisions, analysts say the public should also consider what parties and their Members of Parliament have said and done over the past five years.

The ruling People’s Action Party (PAP) has consistently defended its decision to raise the goods and services tax (GST) from 7 per cent to 9 per cent, arguing that it was necessary to support rising healthcare and social expenditure.

Fiscal policy: Balancing budgets and using reserves

The Workers’ Party (WP) and Progress Singapore Party (PSP) opposed the GST hike in Parliament, saying it added pressure on Singaporeans already grappling with inflation.

Both parties proposed alternative revenue sources such as using more of the Net Investment Returns Contribution (NIRC), increasing wealth taxes, and tapping a portion of land sales for spending.

The PAP said such alternatives were politically appealing but could undermine long-term fiscal sustainability.

“If they weaken our public finances, the burden will fall on our children. If we mismanage the economy, investors will lose confidence and our incomes will suffer,” Singapore’s Prime Minister Lawrence Wong said in a four-minute video message shared on Facebook and other social media platforms yesterday.

Singapore's Prime Minister and secretary-general of the ruling People's Action Party (PAP) Lawrence Wong greets supporters following his nomination ahead of the general election in Singapore on April 23, 2025. — AFP pic

In 2022, then Deputy Prime Minister Wong said that raising personal income tax to match the GST’s annual revenue of S$3.5 billion (RM11.7 billion) would require top marginal rates to jump from 22 per cent to 42 per cent.

He also warned that increasing corporate income tax from 17 per cent to over 22 per cent to close the gap would hurt Singapore’s competitiveness.

The government has set a fiscal framework that allows spending of only 50 per cent of long-term investment returns from the NIRC.

Then Prime Minister Lee Hsien Loong said in February 2024 that this arrangement ensures reserves grow in line with the economy, contributing about one-fifth of the national budget or 3.5 per cent of GDP in recent years.

The NIRC contributed S$24 billion to government spending in the 2024 financial year.

Opposition calls for greater flexibility

At the Budget 2022 and 2025 debates, WP leader Pritam Singh questioned the GST hike, citing past budget surpluses and warning that inaccurate fiscal projections could undermine public trust.

He noted that the “exceedingly healthy” fiscal position at Budget 2025 had prompted Singaporeans to question the necessity of raising the GST rate in the preceding two years.

The WP proposed raising the NIRC cap to 60 per cent, introducing a tiered GST with exemptions for essentials, and implementing wealth taxes.

In 2021, Sengkang GRC MP Jamus Lim had suggested a net wealth tax of up to 2 per cent on billionaires.

Singh said Singapore must distinguish between “legitimate accumulation of wealth through effort and tangible business activity” and wealth from capital appreciation, which should be taxed differently.

Commercial buildings are pictured from the Marina Bay waterfront in Singapore on April 22, 2025. — AFP pic

The PSP took a more aggressive stance, proposing that 100 per cent of the NIRC be spent and land sales be counted as revenue.

In a February 2024 speech, PSP’s Leong Mun Wai expressed the PSP’s stance on the NIRC, saying that it was “supposed to enhance the welfare of Singaporeans so as to avoid the necessity to increase taxes”.

He argued that reserves should be used to enhance current welfare, especially as economic growth slows and incomes stagnate.

Debating intergenerational equity

PAP leaders said the fiscal rules instil discipline and fairness between generations.

Wong said that without the NIRC, GST would have had to be raised to 18 or 20 per cent. A one-fifth cut to the NIRC alone would push GST to 11 per cent.

He added that changing reserve rules should be a “last resort”, while tools like GST can be applied progressively.

Experts such as Associate Professor Terence Ho of the Institute for Adult Learning agree that the current 50 per cent cap ensures reserves grow with the economy and imposes fiscal discipline.

“It forces greater rigour in deciding what to spend on,” he said.

Dr Gillian Koh from the Institute of Policy Studies said Singapore had already spent S$40 billion from its reserves during the Covid-19 pandemic, warning that future returns might not match past performance.

Economist Walter Theseira noted that the debate over when to spend reserves is ultimately a judgement call, given the uncertainty of future needs.

Wealth taxes and GST tiers face hurdles

While WP and PSP have called for wealth taxes and a tiered GST system, analysts warn of complications.

Gene Kwee from Forvis Mazars said Singapore’s single-rate GST is efficient and well understood, and a tiered system would require a major overhaul.

Wong said the GST system is already tiered by effect, since higher-income households pay more even on basics.

He added that with the Assurance Package and GST Voucher scheme, households in the bottom 30 per cent pay an effective GST of less than 3 per cent.

Kwee also said wealth taxes could prompt capital flight and tax avoidance, and might not redistribute income as intended.

“Striking the right balance between equity, economic competitiveness and administrative feasibility will be key,” he said.