Govt to enhance $6.6b package to cushion impact of GST hike if need arises: Lawrence Wong
The Government will continue to monitor inflation closely and enhance the $6.6 billion Assurance Package if the need arises, said Deputy Prime Minister Lawrence Wong on Monday (July 4).
The package, which aims to cushion households from the impact of the looming Goods and Services Tax (GST) increase, still holds as it was designed with a buffer in case of higher inflation, he said.
"We will continue to assess the adequacy of the Assurance Package as the inflationary outlook evolves.
"If need be, we will further enhance the Assurance Package to uphold the commitment," said Mr Wong, who is also Finance Minister.
He was responding to questions from eight MPs on the adequacy of Government support measures for Singaporean households amid inflationary pressures.
The Assurance Package - first announced by Deputy Prime Minister and then-Finance Minister Heng Swee Keat in 2020 - and a further $1.5 billion package announced last month are examples of how Singapore is monitoring global and domestic developments carefully and ensuring that support measures are adequate, added Mr Wong.
"You have my word - if the situation worsens significantly, we will be prepared to do more, especially to provide targeted help for the lower income groups.
"We will continue to do so while living within our means, and upholding prudence and responsibility in fiscal management," he said.
Mr Wong said Singapore must ensure it has sufficient resources to tackle its longer-term challenges, and do so in a fiscally responsible and sustainable manner.
This is why the Government will need to go ahead with the GST increase as announced at Budget 2022, he said, adding that it had already anticipated the higher inflation outlook earlier this year.
"Hence, instead of a 2 percentage point increase this year, I had decided to delay and stagger the GST increase over two steps, by 1 percentage point from January 2023, and 1 percentage point from January 2024," he said.
Mr Wong added that Singapore should not push back the GST increase further as it will need the funds urgently to take better care of its growing number of seniors and to meet its rising healthcare expenditures.
But it had also set aside $6.6 billion for the Assurance Package to cushion all citizen households from the impact of the GST hike, he noted.
As a result, the majority of Singaporean households will not feel the impact of the GST increase for at least five years and for lower-income households, the impact of the GST increase is delayed by about 10 years, he said.