While calling the government’s newly announced S$1.5 billion support package “a step in the right direction”, the Workers’ Party (WP) reiterated its stance that the Goods and Services Tax (GST) should not be increased.
“The WP has argued in Parliament against such a move at a time of heightened inflation risk and with other options for revenue generation,” wrote the opposition party in a Jun. 22 Facebook post.
“Inflation continues to rise and is at a decade high, and Singaporeans are bearing the brunt of it.”
The party added that it would continue to argue against the GST increase in parliament while repeating calls for alternative sources of revenue.
This includes proposed wealth taxes and raising the reserves contribution ceiling.
GST to be raised starting 2023
In announcing the support package focused on countering inflation, Deputy Prime Minister Lawrence Wong said on Jun. 21 that the government would be moving ahead with its plan to increase GST by two per cent, staggered over 2023 and 2024, due to increased spending needs.
Wong, who is also the Finance Minister, said that Singapore’s spending needs had gone up due to challenges such as an ageing population, improving healthcare, and climate change.
While he acknowledged concerns about the GST adding to inflation and cost of living, Wong said that the GST hike had been pushed back as late as possible.
“A difficult time for our people”
When the topic was brought up in February this year during the Budget Debates, Leader of the Opposition Pritam Singh argued that the GST increase came at “a difficult time for our people”.
“Inflation is on the upswing and prices are high,” he said on Feb. 28.
“The Workers’ Party has previously raised several proposals in this House, on both taxes and adjustments to the reserves framework. These options do not constitute a raiding of the reserves as the PAP enthusiastically and inaccurately portrays.”
During his own speech on Mar. 3, Wong said that while he noted the WP’s proposed alternatives, “The short answer is we cannot just ignore consumption taxes and put the entire burden on income and wealth taxes.”
Addressing wealth taxes in particular, Wong said that the changes made to property taxes are “not insignificant at all”, although they have been structured in a “highly progressive” manner.
With regards to raising enough revenue from these taxes to eliminate the need for GST, Wong explained:
“Well, we would have to tax all non-owner-occupied residential properties at a significantly higher rate. Suppose we taxed all non-owner-occupied residential properties at a flat 36 per cent. This would still not be enough.
Because the number of non-owner-occupied residential properties is considerably less than that of owner-occupied residential properties. So, we will need to raise property tax rates significantly for owner-occupied residential properties including for HDB flats.”
Top image via gov.sg on YouTube