Singapore plans to raise existing taxes to strengthen the city-state’s fiscal footing to meet growing expenditure needs and to prepare for unforeseen events, Finance Minister Heng Swee Keat said in his budget speech on Monday.
Heng said the government intends to lift the Goods and Services Tax by two percentage points, to 9 percent from 7 percent, sometime in the period 2021-2025.
The exact timing will depend on the state of the economy and how expenditure grows and how buoyant existing taxes are. “But I expect that we will need to do so earlier rather than later in the period,” he said.
The minister estimated that a two percentage point increase in GST will provide a revenue of almost 0.7 percent of GDP per year.
“In the next decade, between 2021 to 2030, if we do not take measures early, we will not have enough revenues to meet our growing needs,” said Heng.
The government plans to introduce GST on imported services with effect from January 1, 2020.
The minister raised the stamp duty on residential properties in excess of S$1 million to 4 percent. The rate will take effect on February 20.
He also raised the expenditure on infrastructure to around S$20 billion in FY2018.
The minister said the budget position will remain expansionary. The government forecast a small budget deficit of S$0.6 billion or 0.1 percent of GDP for FY2018.
For FY2017, a budget surplus of S$9.6 billion or 2.1 percent of GDP was estimated.