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Deputy Prime Minister (DPM) Heng Swee Keat has described the tax increases announced in Budget 2022 as "critical" to Singapore's "continued progress as a people and as a nation".

"To create a better, greener, and more inclusive future, we will need to raise revenue to fund these plans," explained Heng in a Facebook post on Feb. 18.

Heng's successor as Finance Minister, Lawrence Wong had outlined a set of measures to increase Government revenues in his Budget 2022 speech.

These included changes to:

• carbon tax
• personal income tax
• property tax
• tax on luxury cars
• and GST

Acknowledging that "tax increases are never popular", Heng wrote that it was possible to raise revenue in a "fair, progressive, and gradual" manner.

Delaying the increase in GST

"I raised the need for a GST increase in Parliament back in 2018," he said.

"We delayed the GST increase due to the pandemic," he added.

The former Finance Minister then explained that the government responded to Singaporeans' concern about raising GST at this time — "when prices are rising" — by delaying the increase until 2023, and staggering it over two years.

He also pointed to the additional S$640 million top-up of the Assurance Package announced at this year's Budget; the initial S$6 billion package had been designed to offset the increase in expenses from the GST hike.

The DPM also noted that investment income from Singapore's past reserves, currently the Government's biggest source of revenue at 20 per cent, had helped to dampen the GST increase.

"If not for Past Reserves, we would need to more than double GST or personal income tax to balance the Budget," he said.

Investment needed to build collective future

In his post, Heng touched on several long-term moves Singapore would have to make post-pandemic that "will improve the lives of everyone in years to come".

"Together we will need to invest in new capabilities, transform our economy and create better jobs for our people," he wrote.

"We will need to make the green transition as the world grapples with climate change. We will need to renew our social compact by uplifting lower-wage workers and disadvantaged families, and enabling everyone to realise their potential."

These moves, he explained, required "substantive and sustained investments".

"Ultimately, everyone needs to chip in to build our collective future, with those with more means contributing more taxes."

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Top image from Heng Swee Keat's Facebook page