Government makes good on pledge to offset burden of higher GST

  • ASEAN+
  • Thursday, 14 Dec 2006

WHEN the goods and services tax (GST) goes up, Singaporean families need not worry about having to pay more for their children’s school fees.  

They will also not have to pay more for TV and radio licences, or parking at HDB carparks.  

This assurance was given by the Finance Ministry on Tuesday. It was elaborating on the types of government fees that will not be increased for a year, when the GST is raised from 5% to a proposed 7%.  

The list of frozen fees, however, will not include charges that are not set by the government; for instance, service and conservancy charges and public transport fares.  

The reason: service and conservancy fees are decided by town councils, while bus and train fares have to be approved by the Public Transport Council.  

The ministry gave these responses to The Straits Times, which had asked for details on the types of fees that would remain unchanged following a pledge from Second Finance Minister Tharman Shanmugaratnam. He had said last month that the government would cushion the impact of the GST increase on families.  

The lower-income group would be better off than before, and the middle-income group would get help as well, he had promised.  

Underlining the point, the ministry said: “The government’s move to freeze fees is a signal of our commitment not to add to inflation at the time of the GST increase.”  

Fees not set by the government are excluded from the list as any changes are determined by market or other forces.  

These include utilities charges, polyclinic and hospital charges, and phone bills. Polytechnic and university fees and HDB flat prices are also not on the list.  

However, some Singaporeans feel that such charges should be included.  

Sales manager Roland Tan, 51, who has a daughter in secondary school, said: “No increase is good news but how about applying it to other costs, like utilities and health care?  

“I spend a few hundred dollars every month on both,” said Tan, who cares for his 79-year-old mother.  

Official figures show health care, school and tuition fees, and radio and TV licence fees form about 10% of a family’s expenses.  

However, the government has given the assurance it will continue to absorb the GST for school fees and subsidised health care.  

University don Chew Soon Beng said it made sense to keep the fees unchanged to avoid any inflation rise.  

Otherwise, it could fuel expectations of higher wages and this would eventually erode Singapore’s competitive edge, said the labour economist.  

Central Singapore district mayor Zainudin Nordin urged families to take the frozen fees with the other measures the government will introduce to offset the GST increase.  

These measures are due to be unveiled by Tharman on Budget Day, Feb 15.  

When GST was introduced in 1994 and raised from 2003, the offset packages included rebates on service and conservancy fees for HDB homes.  

Zainudin also suggested that non-government agencies could follow the “government’s good example and not increase their fees for a year.” – The Straits Times / Asia News Network  

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