SINGAPORE — A DBS research report published on Tuesday (Nov 28) expects the government to raise the goods and services tax (GST) from 7 per cent to 9 per cent in next year’s Budget.
And the projected hike is likely to be staggered over the next two years, said the report by DBS senior economist Irvin Seah.
Mr Seah estimated that a 1-percentage-point increase in GST would bring in an additional S$1.6billion to S$1.8billion in tax revenue for the government — equivalent to 0.4 per cent of Singapore’s nominal gross domestic product.
“Hiking the GST is politically challenging given its regressive nature. In this regard, timing is crucial. With the next General Election (GE) due (by January 2021), policymakers will have to act fast… the GST is perhaps the most direct and effective tool in terms of raising tax revenue,” Mr Seah said.
Senior Minister of State (Finance) Indranee Rajah told the Straits Times in an interview published on Sunday that the Government has not decided on the date of the impending tax hike.
She added that the Government will take into account factors such as setting aside enough time for people to absorb the news, and ensuring the needy “have enough buffer” against the impact.
Speaking to TODAY, Mr Seah said he expects the GST hike to be announced during the Budget statement – which is traditionally delivered in February or March – and implemented in the second half of next year.