Singapore set to hike taxes
Singapore will be raising its taxes as money demand from the government grows for spending on infrastructure and social services such as healthcare, said Prime Minister Lee Hsien Loong on November 19 at the People’s Action Party (PAP) annual convention in the city state.
“Raising taxes is not a matter of whether, but when,” Lee said, reiterating that the government expects spending on healthcare and other safety nets and infrastructure will rise “rapidly,” but it will explain to Singaporeans what the money is needed for and show how it will benefit them.
According to Singapore’s finance minister Heng Swee Keat’s, the government’s annual healthcare spending over the past five years has more than doubled to around S$10 billion ($7.38 billion) in the 2016 financial year on grounds of enhanced subsidies and expanded services. This will continue to rise as Singapore’s population ages, he said, adding that Singapore’s annual spending on childcare is also expected to double to S$1.7 billion ($1.26 billion) until 2022.
The projected expansion of the MRT network is also expected to cost more than S$20 billion ($14.76 billion) over the next five years, along with the new Terminal 5 at Changi Airport which will cost “tens of billions of dollars,” Heng said. There will also be other major infrastructure investments like the high-speed railway to Kuala Lumpur and the new Jurong Lake District built around the high-speed rail terminus. The capacities of Singapore’s air and sea ports, he added, will also be doubled.
Economists have been scratching their heads which taxes could be increased. The most likely event would be a hike in the Goods and Services Tax (GST) which was last raised in 2007 by two percentage points to seven per cent and now could possibly see a rise to eight of even ten per cent. GST is the second-largest generator of government revenue, after corporate and personal income tax, so even a small increase would mean potentially very large returns for the government. Other taxes are a 17-per cent corporate tax and a progressive personal income tax from zero to 22 per cent.
However, the government would likely not raise taxes before the next general election in 2021. In the meantime, the improvement of Singapore’s economy could provide some leeway. For now, Singapore’s economy is benefiting from the improving global economy. GDP growth this year may even exceed three per cent, better than the initial forecast of 1.5 per cent and the revised forecast of two to three per cent, Lee said.
Singapore will be raising its taxes as money demand from the government grows for spending on infrastructure and social services such as healthcare, said Prime Minister Lee Hsien Loong on November 19 at the People's Action Party (PAP) annual convention in the city state. "Raising taxes is not a matter of whether, but when," Lee said, reiterating that the government expects spending on healthcare and other safety nets and infrastructure will rise “rapidly,” but it will explain to Singaporeans what the money is needed for and show how it will benefit them. According to Singapore’s finance minister Heng Swee Keat's,...
Singapore will be raising its taxes as money demand from the government grows for spending on infrastructure and social services such as healthcare, said Prime Minister Lee Hsien Loong on November 19 at the People’s Action Party (PAP) annual convention in the city state.
“Raising taxes is not a matter of whether, but when,” Lee said, reiterating that the government expects spending on healthcare and other safety nets and infrastructure will rise “rapidly,” but it will explain to Singaporeans what the money is needed for and show how it will benefit them.
According to Singapore’s finance minister Heng Swee Keat’s, the government’s annual healthcare spending over the past five years has more than doubled to around S$10 billion ($7.38 billion) in the 2016 financial year on grounds of enhanced subsidies and expanded services. This will continue to rise as Singapore’s population ages, he said, adding that Singapore’s annual spending on childcare is also expected to double to S$1.7 billion ($1.26 billion) until 2022.
The projected expansion of the MRT network is also expected to cost more than S$20 billion ($14.76 billion) over the next five years, along with the new Terminal 5 at Changi Airport which will cost “tens of billions of dollars,” Heng said. There will also be other major infrastructure investments like the high-speed railway to Kuala Lumpur and the new Jurong Lake District built around the high-speed rail terminus. The capacities of Singapore’s air and sea ports, he added, will also be doubled.
Economists have been scratching their heads which taxes could be increased. The most likely event would be a hike in the Goods and Services Tax (GST) which was last raised in 2007 by two percentage points to seven per cent and now could possibly see a rise to eight of even ten per cent. GST is the second-largest generator of government revenue, after corporate and personal income tax, so even a small increase would mean potentially very large returns for the government. Other taxes are a 17-per cent corporate tax and a progressive personal income tax from zero to 22 per cent.
However, the government would likely not raise taxes before the next general election in 2021. In the meantime, the improvement of Singapore’s economy could provide some leeway. For now, Singapore’s economy is benefiting from the improving global economy. GDP growth this year may even exceed three per cent, better than the initial forecast of 1.5 per cent and the revised forecast of two to three per cent, Lee said.
