PM Lee explains why govt is raising GST rather than dipping into reserves
He gave the government's rationale, will Singaporeans accept?
Witness to War: Remembering 1942
23 September 2017 - 25 March 2018, -
National Museum of Singapore
TLDR version: If reserves are used for rising expenditure such as healthcare, the reserves would be depleted, according to Prime Minister Lee Hsien Loong.
When news first came out that the Government planned to raise the Goods and Services Tax (GST) somewhere between 2021 and 2025, Singaporeans questioned the rationale behind it. Economist Donald Low asked whether we could utilise more of the reserves and whether more of the Net Investment Returns (NIR) can be used to finance our needs.
Currently, the Government can spend up to 50% of the NIR, the rest goes back into the reserves.
PAP MPs Foo Mee Har and Chong Kee Hiong also questioned whether there was an alternative to raising GST. Foo said that imposing GST on imported services would broaden tax revenue and suggested raising alcohol tax and imposing a sugar tax. Chong asked if the GST hike could be held off, pending Singapore’s economic performance.
Reserves will be depleted
PM Lee was delivering a speech during a Chinese New Year dinner in Teck Ghee last night (Mar 4). In his speech he said that the reserves “are our precious nest egg, built up over many years. It is our duty to manage the reserves, to invest them wisely, to keep them safe and intact, for a rainy day. So that one day when we encounter a rainy day, the reserves will be there for us.
“But an ageing society and healthcare is not a rainy day, it is an “everyday need money” day. It is a long term trend and we are ageing, we will need to spend more on healthcare every year, year after year, for many years to come.
“If we use the reserves for something when you must use money every day, soon you will find that the reserves are going down, they are depleted and when in fact the rain comes, thunder and lighting, and our children or grandchildren really need the money, they will find that it is gone.”
He added that Singaporeans have a duty to protect the interest of future generations.
Judging by the top ‘liked’ comments on Facebook, many netizens found it hard to agree with the Government’s rationale.
Several commenters also noted that they may not be around to see the fruits of this prudent labour:
Read more on GST Hike:
Top image from Lee Hsien Loong Facebook page