Budget 2022: GST to be raised to 8% in 2023, 9% in 2024

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·Editorial Team
·3-min read
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Finance Minister Lawrence Wong during the Budget 2022 speech. (PHOTO: Screenshot/MCI YouTube channel)
Finance Minister Lawrence Wong during the Budget 2022 speech. (PHOTO: Screenshot/MCI YouTube channel)

SINGAPORE — Singapore's goods and services tax (GST) will be raised from next year, and it will be staggered out in two steps: from 7 to 8 per cent on 1 January 2023, and from 8 to 9 per cent on 1 January 2024.

Finance Minister Lawrence Wong announced the hike during his Budget speech on Friday (18 February), and said that the revenue from the GST hike will go towards supporting Singapore's healthcare expenditure and to take care of the senior citizens.

"I have carefully considered the overall situation: the ongoing (COVID-19) pandemic, the state of our economy, and the outlook for inflation. Our revenue needs are pressing, but I also understand the concerns that Singaporeans had about the GST increase taking place at the same time as rising prices," he said.

"Therefore I have decided to delay the GST increase to 2023 and to stagger the increase over two steps."

Measures to cushion GST hike

To cushion the impact of the GST hike on Singaporeans, Wong announced an additional top up of $640 million to the $6 billion Assurance Package announced by his predecessor, Deputy Prime Minister Heng Swee Keat, in Budget 2020.

The Assurance Package unveiled by Heng provided all adult Singaporeans with cash payouts of between $700 and $1,600 over five years, so most households will get enough to offset at least five years' worth of additional GST expenses.

The new $6.6 billion package unveiled by Wong will now provide these payouts:

  • Cash payout - $700 to $1,600 for every Singaporean aged 21 and above over the next five years.

  • U-Save rebates - $330 to $570 additional U-Save rebates for eligible households over the next four years.

  • GST voucher (Seniors’ Bonus) - $600 to $900 cash payout for eligible seniors aged 55 and above over the next three years.

  • MediSave top-ups - $450 top-up over the next three years for Singaporean children aged 20 and below and seniors aged 55 and above.

  • CDC vouchers - $400 vouchers ($200 each in 2023 and 2024) for all Singaporean households.

The government will also be providing more permanent support by enhancing the GST Voucher scheme in three ways:

  • Service and conservancy charges rebate will be made a permanent component of the scheme.

  • The assessable income threshold for GST vouchers will increase from $28,000 to $34,000 to cover more Singaporeans.

  • Higher cash payouts: Those residing in homes with annual values of below $13,000 will see cash payouts increase from $300 to $500 by 2023. Those residing in homes with annual values between $13,000 and $21,000 will see payouts increase from $150 to $250.

GST hike held off last year amid COVID-19 pandemic

The GST hike was announced by DPM Heng in 2018. The increase was held off last year as Singapore grappled with COVID-19, but Prime Minister Lee Hsien Loong indicated in his New Year message that the Government will have to "start moving" on the hike as the economy emerges from the pandemic.

The GST was introduced in 1994 as part of a shift from direct taxes to indirect ones to boost Singapore's international competitiveness. It was first raised from 3 per cent to 5 per cent over 2003 and 2004 - by one percentage point at a time - and then to 7 per cent in 2007.

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