Photo of Heng Swee Keat from Yahoo

Calling the 2% GST increase a “difficult news” to Singaporeans, Finance Minister Heng Swee Keat said that Singaporeans should “should the bigger picture” and support the 9% GST. Minister Heng Swee Keat said the GST increase is the “most appropriate” and that he can’t increase corporate tax because “others are reducing it”:

“The decision to raise the goods and services tax (GST) was a difficult one, but it is the most appropriate option to help Singapore raise revenues at this stage. Over the past year, the Government thoroughly scrutinised all possible alternatives.We looked at all the different taxes that we could change, even non-tax measures that we could take. Each of these has its pluses and minuses and when we looked at the overall scheme of things, we decided that at this stage the GST is still the most appropriate. For instance, other countries are reducing corporate taxes. So a corporate tax hike could have unpredictable consequences – including the possibility of businesses shifting out of Singapore… I hope they can see the bigger picture.”

By making a flawed comparison linking GST revenue directly to healthcare spendings, the Finance Minister complained that the government does not have enough money, blaming healthcare and the ageing population:

“Revenue will not be enough. As it is, money from the GST hike will not cover healthcare spending; the latter is estimated to rise to 3 per cent of gross domestic product a year over the next decade, while the GST hike is forecast to bring in revenues amounting to 0.7 per cent of GDP every year.”

The Minister also shot down suggestions that there are other ways to make money from the people:

“I’ll be very happy if that happens, but I will caution it is unlikely because the existing taxes will have to be extremely buoyant and the growth will have to be very, very high in order for us to be able to come up with that extra revenue to meet the expected rise in expenditure.”

Minister Heng Swee Keat said that multi-billion dollar spending on Terminal 5 and providing free rail infrastructures to SMRT are “careful spending” and not “superfluous”:

“The Government has been very careful in managing its expenditure, and the money raised is channelled to long-term needs. It is not as if tomorrow we’re going to spend on something that is totally superfluous. If people feel that this is profligate spending, then I will be very sad.”