"Singapore's Prime Minister, Lawrence Wong, acknowledged that increasing the Goods and Services Tax (GST) was a tough decision but a necessary one for
“Singapore’s Prime Minister, Lawrence Wong, acknowledged that increasing the Goods and Services Tax (GST) was a tough decision but a necessary one for the nation’s financial stability. Speaking in Parliament as he concluded the Budget 2025 debate, he highlighted the government’s long-term responsibility over short-term popularity.
The Budget proposal, unveiled on 18 February, includes record spending of $143.1 billion, SG60 vouchers, and additional CDC vouchers, with a projected $6.8 billion surplus for the financial year 2025. However, concerns were raised regarding the GST hike’s impact on inflation and whether fiscal policies have been overly cautious.
Wong recalled the financial strain Singapore faced during the COVID-19 crisis, which required multiple budget adjustments and withdrawals from national reserves. While revenue from property and income taxes had increased, it was insufficient to sustain rising expenditures. As a result, the government determined that a GST hike was necessary.
He stressed that the government implemented a comprehensive assurance package to cushion the GST’s effects, ensuring most households would not feel the impact for at least five years. Additionally, permanent GST vouchers continue to provide support for lower-income groups.
Opposition Leader Pritam Singh questioned whether the tax increase had contributed to what he called “”turbocharged inflation.”” Wong dismissed this claim, stating that global factors such as supply chain disruptions, geopolitical conflicts, and rising energy costs were the main drivers of inflation. He pointed out that inflation had already been climbing before the GST increase and that its direct impact on price levels was temporary.
Addressing broader financial concerns, Wong emphasised that Singapore remains in a unique and favourable fiscal position compared to Western nations struggling with large deficits and growing national debt. He noted that while some countries rely on natural resources for investment returns, Singapore has managed to build a strong financial foundation despite lacking such assets.
Beyond taxation, Wong addressed two additional key concerns: adapting businesses and workers to rapid technological changes and ensuring Singaporeans can navigate economic challenges. He urged against blaming foreigners for job uncertainties, warning against the rise of xenophobia seen in other nations. Instead, he reiterated the importance of upskilling and lifelong learning through initiatives like SkillsFuture.
Wong concluded by reinforcing that while cost-of-living support measures form only a small fraction of the Budget, the government’s primary focus is on long-term investments in education, skills development, and employment opportunities. He asserted that these initiatives would empower Singaporeans to succeed in an evolving economy rather than rely solely on short-term financial aid.”
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