GST will go up to 8% on 1 Jan 2023 & 9% from 1 Jan 2024
The Government will delay the planned Goods and Services Tax (GST) hike to 2023 and stagger the increase in two steps, Finance Minister Lawrence Wong said in his Budget speech on Friday (Feb 18). The first increase from 7 per cent to 8 per cent will take place on Jan 1, 2023, and the second increase from 8 per cent to 9 per cent will take place on Jan 1, 2024.
This comes after Prime Minister Lee Hsien Loong said in his New Year message in December that the Government will have to start moving on the planned hike this year, given that the economy is emerging from COVID-19. The plan to raise the GST by two percentage points, from 7 per cent to 9 per cent, was first announced in 2018 during then-Finance Minister Heng Swee Keat’s Budget speech.
Mr Wong said on Friday that the GST hike is necessary to support Singapore’s healthcare expenditure and to take care of its seniors. On the timing, Mr Wong said he has considered the overall situation – the pandemic, the state of Singapore’s economy and the inflation outlook. “Our revenue needs are pressing. But I also understand the concerns that Singaporeans have about the GST increase taking place at the same time as rising prices.”
Singapore to raise GST from 7% to 9% in two stages in 2023 and 2024
The goods and services tax (GST) rate will increase from 7 to 9 per cent in two stages - one percentage point each time on Jan 1, 2023 and Jan 1, 2024. The $6 billion Assurance Package earlier announced in 2020 to cushion the impact of the GST hike will also receive a boost of $640 million, totalling $6.6 billion, said Finance Minister Lawrence Wong on Friday (Feb 18) in his maiden Budget speech.
The delayed GST hike will bring in about 0.7 per cent of gross domestic product in revenue annually - about $3.5 billion - when the full hike is in place in 2024. It will go towards supporting healthcare expenditure and to take care of senior citizens while other areas of social spending rise as well. GST revenue by itself will not be sufficient to cover additional healthcare spending, said Mr Wong. That is why Singapore needs not only the GST increase but also the changes to personal income tax, property tax and vehicle tax which he had announced earlier in his speech, he added.
Where the timing of GST is concerned, Mr Wong said he had carefully considered the overall situation - the ongoing pandemic, the state of the economy and the outlook for inflation. "Our revenue needs are pressing. But I also understand the concerns that Singaporeans have about the GST increase taking place at the same time as rising prices," he said. That is why the GST increase will be delayed to 2023 and the hike will be staggered over two steps - first, from 7 per cent to 8 per cent on Jan 1, 2023; followed by 8 per cent to 9 per cent on Jan 1, 2024.
GST increase to be staggered over 2 years, starting from Jan 2023
The Goods and Services Tax (GST) will be increased progressively, rising to 8 per cent with effect from Jan 1, 2023, and going up again to 9 per cent in 2024, Finance Minister Lawrence Wong announced on Friday (Feb 18).
During his maiden Budget speech, Mr Wong said that the decision to stagger the increase was made in view of the prevailing overall situation, such as the ongoing Covid-19 pandemic and inflation outlook, while balancing them with pressing revenue needs. He assured Singaporeans that the Government will be absorbing the increase for key expenditures to help the public cushion the impact of the hike. Any increase in government fees and charges will be put off by a year from January 2023.
Steps will also be taken to mitigate possible profiteering by businesses during the roll-out of the GST increase. The GST rate has been kept at 7 per cent since July 1, 2007. An increase in this rate from 7 to 9 per cent was first foreshadowed in 2018 during a Budget speech by then-Finance Minister Heng Swee Keat, who said that the increase would happen sometime between 2021 and 2025. In 2020, Mr Heng said that the hike would not take place in 2021 owing to the impact of the Covid-19 crisis on the economy.
Overview of GST Rate Change
In Budget 2022, the Minister for Finance announced that the GST rate will be increased from:
- 7% to 8% with effect from 1 Jan 2023
- 8% to 9% with effect from 1 Jan 2024
The revenue from the increase in GST will go towards supporting our healthcare expenditure, and to take care of our seniors.
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