SINGAPORE: The Goods and Services Tax will be increased to 7 percent from 5 percent presently.

This was announced by Prime Minister Lee Hsien Loong in Parliament on Monday.

However, when the rise will be implemented, will be decided later.

Speaking in Malay, Mandarin and English, Mr Lee explained that the hike was necessary to finance the enhanced social safety nets, needed to help the lower income group and he emphasised that the offset package would more than counter the rise in GST.

While Singapore's current model to tackle the widening income gap is sound, Mr Lee said the government would take on two approaches to deal with the new environment - to strengthen the safety nets and tilt the balance in favour of the lower-income groups who do not benefit from the fruits of economic growth.

To do this, government spending will have to go up. The government now spends some 15 percent of its GDP - one of the lowest in the world.

"This is inevitable over the next 5 to 10 years. Infrastructure investments will cost money - R&D is to cost $5b over the next 5 years; as medical technology improves, people age and more will go to hospitals to get more treatment, so spending is bound to go up. As we tilt the playing field across the board, the lower income will be getting another boost, not just once in a while. Therefore its better to start building resources now so that when we spend more, we have the means to do so," said Mr Lee.

To finance this, indirect taxes or the Goods & Services Tax will have to go up.

"It will give us precious extra resources to implement social programmes like Workfare later on. Our aim is to help the lower income groups and the elderly, not to increase their burdens. When we implement the GST increase, it's not just the GST increase, it's the package which will fully offset the impact of the GST increase and begin to strengthen the social safety nets and tilt the balance in favour of the low income groups - we will not just raise the GST but we will have a comprehensive offset package," said Mr Lee.

This package will be weighted more to the middle and the low income groups, especially the elderly, and it will more than offset the GST increase.

"It is not just an offset package to deal with the GST. It is a whole set of measures which we are taking in order to tilt the playing field in favour of the lower income group, which is what we have to add and tally in the balance, and my purpose is to help the lower income group. For the middle income, it will be generally about ok; for the higher income, I think the higher income should end up paying more overall. It's part of being one society. I'm not going to tax 15% on income tax, I'm not going to tax 25% from GST the way the Scandanavians do, but I have to make the adjustments of 2% which I think is fair and I think Singaporeans will support," added Mr Lee.

He explained that it is better to do the increase now when the economy is doing well, rather than wait till later. This will give the government time to see how this adjustment can be managed, and to cope better with the unknown forces of globalisation over the next 5 to 7 years.

More details of the GST increase will be announced on 15 February 2007, which is Budget Day. Mr Lee added that Second Finance Minister Tharman Shanmugaratnam would deliver the Budget speech.

Another change will be the amending of the Constitution to allow the government to tap the capital gains received from investing the national reserves. - CNA /dt


Lan jiao I tell you. Eh cheng hu lemme tell you. You want to help low income right don't need to make a lot of pattern one. Just cut down the tax. You few months ago increase bus fare now you increase GST? Fucking hell now one pack of rice like 30 cents more because of your chee bye tax. Eh siao eh. Every item 30 cents you add up la. You buy rice 30 cents. You buy bak 30 cents. You buy veggie 10 cents. Add here add there end up chee bye fortune liao. Eh brother, your pay 1 million can tahan 30 cents leh. My pay kanina 200 dollars 30 cents become material leh. Nah beh. Ciggy tax, GST, transport, stamp fee, every lan jiao also want to tax. Kanina next time I at TP eat beef steak you tax me Beef Tax issit? You see our pay a not? Got increase a not?

Simi lan jiao more precious supplies. Our money tak ni surplus dunno how many billion no need top wa lang eh lui eh la. Lim beh ke tan jiak ng pa ko nia leh, ai bueh hun ki ma ai san xiong si xiong, ni nah beh.

Simi lan jiao safety net. You take the net and hang us on the neck la. Quicker and less cost.

Fucking just smoke away my life la.