According to financial experts, the Singapore government may raise the Goods and Services Tax (GST), or other taxes including consumption taxes, stamp duties, and property taxes, in the near future, in order to pay for social spending.
On Tuesday, Finance Minister Tharman Shanmugaratnam said that Singaporeans would need to “take collective responsibility” for the government’s social spending, and clarified that the government had not adopted a “Robin Hood” strategy of taxing the rich more to give to the poor for its current Budget.
This expected increase in taxes will come even in spite of the government’s raising of income taxes for top earners in Singapore in recent years.
Experts believe that the GST could go up after next year to 9 or 10 per cent, although experts are divided over when these taxes would be raised.
PricewaterhouseCoopers tax partner Koh Soo How reasoned that since the Government had committed not to raise the GST for five years during the 2011 General Election, any hike would probably take place in 2016 or 2017.
On the other hand, Ernst & Young Solutions head of tax Chung-Sim Siew Moon does not expect a hike in the GST before 2020. “The minister has indicated that the revenue measures that have been put in place will be sufficient for the increased planning needs until the end of the decade,” she noted.
The GST contributes the second largest share, after corporate income taxes, to Singapore’s total operating revenue, contributing about 16.5 per cent in Financial Year 2014.