SINGAPORE will raise its consumption tax next year to fund programmes for its lower income households, Prime Minister Lee Hsien Loong said in remarks published yesterday.
Raising the goods and services tax (GST) from the existing 5% to 7% will mean more money for new measures in education and health care to help poorer Singaporeans, The Straits Times newspaper quoted him as saying.
It's essential for us to tilt the balance in favour of lower income Singaporeans because globalisation is going to strain our social compact, Lee told Parliament yesterday as he outlined his government's agenda for the next five years and beyond.
That's why we are doing all this, he said, adding more details of the planned tax hike will be released when his government presents its annual budget in February.
Apart from hiking the GST rate, Lee said his government was also planning to spend more of the returns made from investing Singapore's reserves, valued at more than US$100bil (RM360bil), on programmes to help less affluent citizens in South-East Asia's wealthiest nation.
Explaining the timing of the planned GST hike, Lee said it was better to raise the consumption tax while the economy was in good shape so his government would have flexibility to fine-tune its social programmes.
I think it's better to do this now when the economy is doing well, said Lee, who is also Minister for Finance.
Then we can manage the adjustments, we have the flexibility to adjust our programmes depending on how things turn out.
The government forecasts economic growth of 6.5-7.5% this year. AFP
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