PAP's Chee Hong Tat responds to opposition parties' call for GST reduction, says revenue currently benefits S'poreans

As political parties ramp up their campaigns for the general election, several have proposed reducing the Goods and Services Tax (GST) from 9 per cent back to 7 per cent.

This includes Progress Singapore Party (PSP) and Singapore Democratic Party (SDP) — both have proposed reductions of GST in their manifestos.

Minister for Transport and Second Minister for Finance Chee Hong Tat has come out with a video on Facebook explaining why there is a need to be "careful with such suggestions".

A difficult decision

Raising the GST was a very difficult decision, Chee said.

"If we could have avoided it, we would have."

Chee explained that the decision was made after carefully studying all available options and realising that the government would not be able to "fulfil" their promise to care for seniors in an ageing society without the increase.

"When this government makes a promise, we honour our commitment. Planning ahead and being prepared for the future is what a responsible government needs to do," he said.

Measures to delay GST increase for Singaporeans

Chee added that with the "enhanced, permanent GST Voucher and GST absorption for education and healthcare," it is actually the "tourists, foreigners and those who are better off" who end up contributing most of the GST revenue.

"It is not our lower and middle-income Singaporeans — they pay a far lower effective GST rate than 9 per cent," he said.

Chee also noted that the GST increase has been effectively delayed for most Singaporean households through the Assurance Package announced this year.

This delay will last at least five years for the majority of households, and more than ten years for lower-income households.

Singapore in stronger fiscal position

The government is "prepared to do more" to support Singaporeans for as long as necessary, he said.

"The revenues that we generate from the GST — from tourists, foreigners and the better off — all these are part of our progressive system to give us the resources we need to provide more support to Singaporeans in so many areas: healthcare, education, housing and public transport."

Therefore, if the GST is lowered, Chee warned, Singapore would be forgoing the revenue currently collected from these groups, which is now being used to benefit Singaporeans.

He emphasised that Singapore is in a "much better and stronger position" to face structural challenges and to "deal with the uncertain near-term outlook".

This, he said, is why Prime Minister Lawrence Wong was able to give the assurance that there will be no further GST increases until 2030.

"Our commitment to Singaporeans is this: we don't raise taxes unless we really have to, but we will do so to look after the needs of Singaporeans — both the current and future generations. And we will continue to be a responsible government that works with you and for you to improve your lives."

Top photo from Chee Hong Tat/Facebook and Canva