Law changed to cushion impact of impending GST hike
GST Voucher Fund can be used to finance Assurance Package and support all Singaporeans
The Goods and Services Tax Voucher Fund can be used for a new package to cushion the impact of the impending GST hike, following changes to a law that Parliament passed yesterday.
The changes to the GST Voucher Fund Act will put in place measures announced in Budget 2020 last month.
The $6 billion Assurance Package, with money from the GST Voucher Fund, will help to delay the impact of the GST increase for most Singaporean households, Deputy Prime Minister and Finance Minister Heng Swee Keat had said then.
It will give all adult Singaporeans cash payouts of between $700 and $1,600 over five years.
The GST is slated to rise from 7 per cent to 9 per cent between 2022 and 2025.
The amendments expand the purpose of the GST Voucher Fund such that the beneficiaries are no longer confined to those who are less well-off, Second Minister for Finance Lawrence Wong said in Parliament yesterday.
"The GST Voucher Fund can then be used to fund the Assurance Package for GST, which will benefit all Singaporeans during the transition period," he said, with lower-income Singaporeans getting greater support.
Since 2012, the existing GST Voucher scheme has been funded by the GST Voucher Fund. Under this scheme, lower- and middle-income households receive annual cash payouts, MediSave top-ups and utilities rebates.
The changes will also allow aid to be given as grants-in-aid to defray expenses incurred by parents or guardians for infants and children under their care and charge.
Nominated MP Walter Theseira asked if the changes implied a shift away from the original intent of the GST Voucher Fund, which was to directly finance relief from the GST for low-income Singaporeans.
Mr Wong assured Associate Professor Theseira that this was not the case.
The Government has a longstanding commitment to lower-income Singaporeans and will continue to provide more support to them through the existing permanent GST Voucher scheme, which will be enhanced when the GST rate goes up, he said.
Nominated MP Anthea Ong also asked for the GST relief to be extended to migrant workers.
To this, Mr Wong said that while the Government appreciates the contributions of migrant workers, it has to put Singaporeans first as fiscal resources are limited.
"This reflects the responsibilities and privileges of citizenship," he said.
"Still, the Government will continue to look at how it can more directly address the concerns and needs of migrant workers by working with organisations that look after their welfare."