Singapore’s Goods and Services Tax (GST) will remain at 7% and not be raised in the year 2021, as had previously been announced.
However, the increase will inevitably happen by the year 2025.
This is to ensure Singapore continues having recurrent sources of revenue for the medium term, explained Finance Minister Heng Swee Keat while delivering the Singapore Budget 2020.
On this, he cited the ongoing COVID-19 epidemic and how more resources must be channelled to Singapore’s healthcare industry and medical sector to meet the demands of unforeseen crises.
A $6b Assurance Package to Cushion Increase
When the GST hike does kick in, the government will introduce the so-called Assurance Package — coming in at $6b — to benefit Singaporeans.
Most Singaporean households will receive five years’ worth of GST vouchers and rebates to offset costs.
Lower-income households, or those living in one- to three-room HDB flats, will enjoy offsets of about ten years worth of GST expenses incurred.
The Assurance Package, however, is only applicable to Singaporeans.
Additionally, Singaporeans can expect cash payouts of between $700 to $1,600 over a five-year period.
Enhancement of Permanent GST Voucher Scheme
The existing GST Voucher Scheme, which benefits lower- to middle-income Singaporeans, will be enhanced in light of the impending GST hike.
On that, though, GST for the lower half of retiree households will continue to be fully offset.
Here’s a quick summary: