Lawrence Wong: No Further Need for GST Hike Up to 2030


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Though we may be working out extra dollars for our increased goods and service tax through gritted teeth and a tightened belt this year, we can take some comfort in the fact that this will be the last increase in a while.

On 28 February 2024, Deputy Prime Minister Lawrence Wong revealed in his conclusion to his Budget 2024 statement in Parliament that, “As of now up to 2030, we are in a sound position.”

My wallet doesn’t feel “sound” though, but maybe that’s just a me problem.

No Further GST Increases Until 2030

Deputy Prime Minister (DPM) Lawrence Wong’s statement was in response to a query posed by Progress Singapore Party Non-Constituency MP Hazel Poa regarding the necessity of raising GST based on the government’s assessment and fiscal projections.

In response, DPM Wong explained that the increase in GST by two percentage points, rising from 7% to 8% on January 1, 2023, and to 9% on January 1, 2024, was implemented to bridge the revenue-expenditure gap until 2030.

He said, “We have closed the funding gap up to 2030. The GST increase that we announced was intended for this, so we are okay up to 2030. We do not need further GST increases up to 2030.”

He further clarified that the revenue generated from the GST hike will be allocated to fulfill Singapore’s medium-term requirements, particularly in healthcare and social expenditure.

In an occasional paper on medium-term fiscal projections published in February 2023, the Ministry of Finance anticipated that government spending would elevate to approximately 19-20% of gross domestic product (GDP) in fiscal years 2026-2030, possibly surpassing 20% by FY 2030.

To address this shortfall, measures were implemented in Budgets 2022 and 2023 to bolster government revenue, aiming to balance escalating expenditure with total revenue in forthcoming years.

He emphasized the Ministry’s commitment to continually revising projections for Singapore’s medium-term fiscal requirements, adding, “So post-2030, we’ll have to see what the picture is. And beyond that, we’ll have to see if indeed there is a funding gap, if there are increased expenditures, and whether or not additional revenues or tax changes are needed to close those funding gaps.”

Did the GST Hike Contribute to Inflation?

Jamus Lim, Workers’ Party MP for Sengkang GRC, suggested that the GST hike likely fueled domestic inflation, drawing parallels to similar trends following value-added tax increases in other jurisdictions.

He questioned DPM Wong on whether the timing of the GST increase was “justified” or if postponement would have been more prudent.

In response, DPM Wong acknowledged that while raising GST had led to price increases, the effect is “once off” and is “not permanent”.

DPM Wong stressed that the increase in GST was not the primary catalyst for local price surges, as the increase in inflation was a global phenomenon that has hit Singapore as well. However, the inflation rate here has since come down and continues to moderate, he said.?

He also brought up the crucial role that the Assurance Package plays in alleviating the increased cost-of-living strains for Singaporeans, particularly lower-income groups, by reducing the GST impact by “more than five years”.

DPM Wong noted earlier in his speech that core inflation for the autumn of 2023 would have reached 6.6% instead of 4.2% if the Monetary Authority of Singapore (MAS) had not intervened on time.


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In response to the timeliness of the GST hike, DPM Wong responds, “If we had not done it at the time we did, when would it be a good time to do it?”

“And, well, if we were to do it this year, or next year, will the opposition therefore support it? I seriously doubt so.

“So, I think our approach is let’s do it correctly. Let’s do it in good time, make sure that our fiscal system remains sound and always ensure that we have sufficient revenues to cover our spending.”

“Can’t We Tap into Our Reserves?”

DPM Wong highlighted that using past reserves excessively, as proposed by some opposition MPs, would jeopardize the welfare of present and future Singaporeans.?

Should it be done, the Net Investment Returns Contribution (NIRC) – which comes from the long-term returns of investing the past reserves – will shrink as a percentage of GDP, and the funding gap will increase.


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Hence, future generations would have to pay more taxes, DPM Wong concluded.

He emphasized that Singapore is currently “enjoying the benefits of savings from the past”, while other advanced economies see debts and deficits rising and their fiscal systems are close to their breaking point.

He underscored People’s Action Party’s commitment to fiscal responsibility and criticized what he termed as “fiscal fantasies”, which include overly optimistic forecasting assumptions, unrealistic suggestions to raise funds from only the rich or kicking the can down the road indefinitely, dominating policy debates worldwide.

He stressed the need for prudence, fairness, and sustainability in fiscal policies, urging the House to uphold these principles.

“Where it comes to certain fundamental principles, and values, like fiscal responsibility, a basic orientation not just to look at today but for the future, this must never be compromised, this must never change,” he added.

“These principles were put in place by our founding leaders. They have continued under successive leaders of the PAP, and they will certainly continue under my watch.”


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In his closing remarks, DPM Wong urged opposition parties to take their different views and the issue of using reserves extensively “to the ballot box” for the people to decide.

He invited them to seek public endorsement for constitutional changes to allow higher spending of Net Investment Returns. He assured that the People’s Action Party would engage in this debate, allowing Singaporeans to determine the most suitable fiscal path for the nation’s future.

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