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SINGAPORE: The government will take steps to strengthen its revenue position, such as increasing the goods and services tax (GST), but will “carefully monitor” the timing of such moves by considering the state of the economy and spending needs, the said. deputy prime minister. Heng Swee Keat on Friday (August 28).
Heng, who is also finance minister, described how the Ministry of Finance (MOF) aims to maintain “a strong and sustainable fiscal system” in the ministry’s appendix to President Halimah Yacob’s speech.
After using “the value of a generation’s savings”, equivalent to more than 20 years of past budget surpluses, to combat the COVID-19 pandemic and its economic repercussions, Singapore must ensure that its fiscal balance is back on track. stable when the economy recovers. Mr Heng said.
However, a challenging economic environment looms, added the minister.
“COVID-19 will lead to new spending priorities, even as we spend more to support our families with their health care and preschool needs and keep them safe.”
READ: Government will weave economic and social policies more closely for the post-COVID-19 world: Heng Swee Keat
At the same time, slower global growth as a result of the pandemic and more intense international competition for tax revenue will put further pressure on Singapore’s revenue.
Heng said the government will take steps to strengthen its income position and will do so “in a way that encourages collective responsibility, with each generation contributing its fair share.”
That is why it plans to increase the GST to finance the growing needs for health and social spending, while making responsible use of loans to finance investments in infrastructure, he added.
“We will carefully monitor the timing of such movements, including the state of the economy and our spending needs,” Heng said.
READ: Budget 2018: GST in Singapore will rise to 9% between 2021 and 2025
Heng first pointed out the need for the GST to be raised from 7 to 9 percent in the 2018 Budget, then said that the increase will occur sometime between 2021 and 2025.
During the first budget in February this year, it announced that the GST increase will not take place in 2021.
Among other priorities, Heng said his ministry will continue to “manage the reserves well” to prepare the country for future shocks and crises, and “invest them for long-term benefits that will be shared equitably among present and future generations.”
READ: Budget 2020: GST will remain at 7% in 2021; S $ 6 billion package when it goes up
URGENCY OF ECONOMIC TRANSFORMATION
The government has rolled out successive major tax packages so far to protect workers and businesses from the economic impact of the coronavirus outbreak, but Heng said it will not be sustainable to continue this level of support indefinitely.
Beyond immediate relief, the pandemic has raised the urgency for an economic transformation.
“We must help businesses and workers adapt and grow in an economy profoundly reshaped by COVID-19,” he said.
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Therefore, the government is accelerating its innovation and digitization momentum in each of its 23 industrial transformation maps, increasing its base of innovative companies and pursuing new frontiers of growth by investing in research in various fields, the minister said.
It is also forging stronger connections with major innovation hubs and key demand markets through trade facilitation agreements and digital economy, platforms such as the Global Innovation Alliance, as well as pushing with significant investments in the seaport and the the country’s airport, Heng added.
Initiatives like the SGUnited S $ 2 billion Jobs and Skills Package will also help build an adaptable and skilled workforce that can take on quality jobs and fuel economic transformation, he said.
READ: Approximately 330 jobs offered with startups under the SGUnited package between April and June
STRENGTHENING OF THE SOCIAL PACT
Heng said policies are also being reviewed and improved to build a “just and equitable society.”
“A strong society is our stabilizer in an increasingly uncertain and volatile world,” he said.
“We will redouble our efforts to strengthen our social compact and build a united Singapore.”
The MOF will deploy resources to “maintain social mobility and opportunities for everyone at every stage of life,” he added.
This includes doubling the annual spending on preschool education from S $ 1 billion to S $ 2 billion in the coming years, as well as creating “an ecosystem of industry-relevant skills” that will enable Singaporeans in the force work improve.
READ: NDR 2019: More preschool subsidies as Singapore prepares to spend more on early childhood education
Support for low-wage workers, vulnerable older people, and households with higher burdens of care will also be strengthened.
“This continues the changes we have made progressively over the years to strengthen social security, through schemes like Workfare and Silver Support, and improvements to preschool, education and health care subsidies,” Heng said.
“We will continue to support quality and affordable education, health care and housing for the broad base of Singaporeans, particularly the low- and middle-income segments. These investments generate human and social capital.”
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