Budget approved by Parliament, GST increase defended
Parliament yesterday approved Budget 2018, after three days of debating and speeches from more than 50 members.
In the vote, 89 MPs voted "yes" on the Government's spending plans outlined by Finance Minister Heng Swee Keat on Feb 19, while eight MPs from the Workers Party (WP) voted "no".
After Mr Heng's 90-minute wrap-up speech, WP Chairman Sylvia Lim (Aljunied GRC) told the House that her party "cannot support" the planned increase in the Goods and Services Tax (GST) - echoing a point fellow constituency-member and WP assistant secretary-general Pritam Singh made three days ago.
During his speech, Mr Heng clarified concerns that other MPs had raised regarding the GST hike. He had announced that it would be raised from 7 per cent to 9 per cent some time between 2021 and 2025.
On the timing of the GST increase, which MPs Lim Biow Chuan (Mountbatten SMC) and Mahdev Mohan (Nominated MP) had spoken about, Mr Heng said that the Government has taken a "long view" of this.
By making the early announcement for a tax change that would kick in at least three years later, the Government was "honest and upfront about our national needs, and setting out what needs to be done".
Mr Heng reiterated how the costs of education, healthcare, and security were likely to go up -a point he had made earlier.
A broad-based tax, like the GST, is needed for Singapore's broad-based spending needs.
We cannot fund our plans to secure Singapore’s future on the basis of episodic windfalls.Finance Minister Heng Swee Keat
While the GST increase is projected to raise revenue worth about 0.7 per cent of Singapore's yearly gross domestic product, Mr Heng said this would only partially cover Singapore's projected spending needs and make the fiscal gap "more manageable".
Several MPs, including Mr Desmond Choo (Tampines GRC), had highlighted how the GST increase would affect lower and middle-income families, as well as the elderly.
To this, Mr Heng announced that the GST Voucher scheme would be enhanced.
Mr Heng added that there will be a transitional offset package, following the implementation of the GST hike.
"Let me assure everyone that we are mindful of the impact of tax changes on households, particularly the lower-income, and will help them to adjust while maintaining a fair and progressive system of taxes and transfers," he said.
Recognising concerns that MPs like Mr Lim and Dr Lee Bee Wah (Nee Soon GRC) had about "illegal profiteering", Mr Heng said the Government is ready to convene a Committee Against Profiteering to prevent businesses from taking advantage of the increase to increase prices beyond the GST increase.
During the three-day debate, some MPs had asked if the Government could use a "windfall surplus", like the $9.6 billion one in the 2017 financial year, to fund the increased spending.
Mr Heng addressed this by saying: "We cannot fund our plans to secure Singapore's future on the basis of episodic windfalls.
"If we are fortunate to have these occasional windfalls, we should do the responsible thing and save most of it for our future needs."
Noting that Dr Intan Mokhtar (Ang Mo Kio GRC) had spoken about increasing personal income taxes, the Finance Minister said that doing so would move Singapore in the "opposite direction".
Referring to suggestions made by Mr Ong Teng Koon (Marsiling-Yew Tee GRC) and Mr Yee Chia Hsing (Chua Chu Kang GRC) to closely look at these, Mr Heng pointed out how in this Budget, the Government will "improve the progressivity of our stamp duty regime" - referring to the increase in the top marginal buyer's stamp duty rates for residential properties worth more than $1 million from 3 per cent to 4 per cent.