The previously-announced 2 per cent increase in the Goods and Services Tax (GST) will not take place next year, says Deputy Prime Minister (DPM) and Finance Minister Heng Swee Keat.

DPM Heng announced this in his 2020 Budget speech on Tuesday (Feb. 18), as part of the measures the Singapore government will be undertaking to support Singaporeans in the ongoing Covid-19 outbreak.

"After reviewing our revenue and expenditure projections, and considering the current state of the economy, I have decided that the GST increase will not take effect in 2021. In other words, the GST rate will remain at 7 per cent in 2021."

The planned 2 per cent hike was previously announced in the 2018 Budget.

Opposition against GST hike has to change tack

So the GST hike will not take place next year.

With Prime Minister Lee Hsien Loong having to call the next General Election (GE) by April next year, opposition parties may have to change tack in approaching the GST issue at election rallies.

Granted, the hike will occur eventually, as Heng said it will still be needed by 2025.

But a week, as a former British Prime Minister said, is a long time in politics.

And four years is an eternity — as well as a potential next election cycle.

Will GST continue to be a GE2020/1 issue?

We revisit the opposition parties' recent remarks and statements on the GST hike.

What are the Opposition parties' positions on the GST?

Workers' Party

In 2018, the main opposition party, the Workers' Party (WP), voted against the Budget in parliament.

To be more specific, they supported Budget 2018's measures but they could not support the proposed hike in GST.

WP Chairman Sylvia Lim said that WP "cannot support the announcement at this point in time" because the government has not yet determined when the GST hike will kick in.

Hence, she said that the WP is not in a position to take a stand (to support or oppose the tax hike) as they did not have a “crystal ball”.

In other words, the WP is still free to take a firmer position on GST in this GE, or the next GE, depending on when DPM Heng confirms the hike.

Progress S’pore Party

The new up-and-coming Progress Singapore Party (PSP) recently shared its wish list prior to the Budget 2020 announcement.

One of its declarations was to advise against an increase in the GST or any other fees (in the next five years at least) because of Singapore’s “strong financial standing”.

In other words, PSP's position is not to increase the GST at least for the next five years.

In contrast, the government's position is to increase the GST within the next five years.

This means that PSP's minimum time limit set for the GST hike to take place matches the government's maximum limit set by DPM Heng.

Singapore Democratic Party

The Singapore Democratic Party (SDP)'s position on GST is clear and unequivocal.

It wants to scrap the hike completely.

As recently as last week (Feb. 12), the party called on the "PAP to scrap plans to hike GST to 9 per cent, now is not the time".

In its press statement, SDP said that there was already little justification for the government to increase the GST prior to the Covid-19 outbreak.

It added that "it is all the more inconceivable for the PAP to proceed with its plans to increase the GST to 9 per cent" with the adverse economic conditions ahead.

Last year, Heng said the GST hike is needed to prepare for anticipated expenditures in healthcare, infrastructure, security and education from 2021 to 2030.

It'll be interesting to see how the different opposition parties — not just WP, PSP and SDP — approach the GST hike topic at the upcoming hustings.

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Top photos via Pritam Singh's Facebook page, screenshot of Budget 2020 livestream, file photo by Weixiang Lim for Mothership