What 'turbocharging' inflation?: NUS prof Ben Leong on Pritam Singh's budget debate speech

The GST hike's impact would likely be smaller during high inflation rather than a period of low inflation, said National University of Singapore (NUS) Associate Professor Ben Leong in a Facebook post dated Feb. 26.

Leong was responding to former Nominated Member of Parliament Calvin Cheng's post saying that the GST should not have been increased "during a time of record global inflation".

"It makes the tax increase a more bitter pill to swallow. All the vouchers and handouts are not going to change this," said Cheng.

Leong, however, disagreed with Cheng's view and supported his point by illustrating what would happen to the cost of a S$1 cup of coffee in different scenarios.

No Ukraine War, no inflation, no nothing

In the first scenario, Leong looked at what would happen in the event of a one per cent GST increase in the event of "no Ukraine war, no inflation, no nothing".

This would mean that the price of a S$1 coffee will become S$1.01.

Nevertheless, stallholders would still increase the price of the S$1 coffee to S$1.10 because they wouldn't want to pay for the cost of the increase but could not collect one cent.

"So they might as well increase more than one per cent because they end up making more money," wrote Leong.

Inflation, but no GST increase

In the second scenario, Leong looked at what would happen if there was inflation but no GST increase.

Leong said that global events around the world including the Ukraine war caused massive inflation last year.

In this case, even without a GST increase, the price of a cup of S$1 coffee would still be increased to S$1.10 regardless.

Inflation and GST increase

Stallholders might increase the price of a cup of coffee to S$1.20 instead of S$1.10 in the event of both inflation and GST increase.

Leong said that doing so would be "profiteering" and was bound to happen "sooner or later regardless".

However, there is also a small possibility that the rate of inflation combined with one per cent of the GST increase might actually be less than 10 per cent in total.

In that case, then increasing the cost of a cup of coffee to S$1.10 would be sufficient.

"In other words, simple Math tells us that the impact of a GST increase would likely be smaller in a period of high inflation rather than that during a period of low inflation," Leong said.

"What 'turbocharging' is Pritam talking about?"

Turbocharging inflation

On Feb. 26, 2025 during the parliamentary debate on the Budget statement, the Leader of Opposition, Workers' Party leader Pritam Singh questioned the second GST hike in 2024 when Singapore was "in the thick of inflation".

"Why the PAP went headlong and headstrong into raising GST, and thereby turbocharging inflation further, is something only the PAP itself can answer."

Pritam said that handouts like assurance packages and Community Development Council (CDC) vouchers may cushion the blow from the hikes, but they will eventually stop, and the increased GST will remain until "any subsequent increase the PAP government sees fit to impose".

Government has given back all the extra GST money

Continuing on his point, Leong pointed out in his Facebook post that the government would be giving out S$800 CDC vouchers to each Singaporean household.

"Do people know how much each household would have to spend to pay S$800 because of the GST increase? Well, it's S$80,000," Leong wrote.

"How many households spend S$80,000 a year?"

This means that the government has given back whatever extra GST was taken last year and more, said Leong.

Leong added that only a group of people paid more GST last year— foreigners and tourists.

"So why are people complaining about an imaginary tax increase that didn't actually happen?"

"Sure enough, we are going to have to pay more GST in the years ahead, but that was the whole point of the GST increase.

It is so that this country can collect more tax revenues in the years to come," Leong wrote.

Top image via Canva