NDR 2022: PM Lee says GST increase needed for healthcare, social spending
The impending goods and services tax (GST) increase is necessary as Singapore's population is ageing rapidly, Prime Minister Lee Hsien Loong said in his Mandarin speech at the National Day Rally on Sunday (Aug 21).
Singapore must be prepared to take better care of the elderly, including providing more medication subsidies to reduce the burden of healthcare costs for older Singaporeans and their families.
More hospitals, polyclinics and other facilities also have to be built so that they can access medical services. All these mean that Singapore's healthcare and social spending is increasing sharply, he said.
"Not raising the GST would be a politically expedient move. However, it would be irresponsible," he said.
"While the people worry about not having enough money to spend, the Government also worries about not having enough money," he said, adding that it is concerned about not having enough resources to take care of low-income families and the heathcare needs of the elderly.
One in six Singaporeans are aged 65 and above. By 2030, this number will increase to 1 in 4, with mature estates seeing their population grey earlier.
PM Lee said many of his Teck Ghee residents were young married couples when he was first elected as an MP in the 1980s. More and more of them now need walking sticks and wheelchairs.
"While I am happy that they continue attending community activities, I am also worried for them, as their healthcare needs will definitely increase over the years," he said.
"Therefore, we must be prepared to take better care of the elderly."
Turning to Covid-19, he said Singapore has been able to cope with the pandemic better than some other countries because of prudent financial management and having sufficient reserves.
The Republic should continue to save for a rainy day and plan for the future, he added.
The planned GST increase will take place in two stages - from 7 per cent to 8 per cent on Jan 1, 2023, and from 8 per cent to 9 per cent on Jan 1, 2024.
Acknowledging that many are worried about the rising cost of living, PM Lee assured Singaporeans that the Government has taken steps to help, and will provide more support if necessary.
For instance, the Community Development Council (CDC) vouchers that have been distributed not only help households defray some daily expenses, but also support heartland shops and hawkers. To date, over 18,000 heartland merchants, hawkers and coffeeshop stalls have joined the scheme. Most households have also utilised their CDC vouchers, with close to $180 million spent so far.
Other forms of support have also been given progressively, PM Lee said.
He cited the example of a married couple with two children living in a three-room HDB flat. They will receive support almost every month, amounting to $3,700 over 12 months that includes:
- This month, they will receive cash payouts of $1,400.
- In October, they will get about $190 in U-save and S&CC rebates to help pay for utilities and service & conservancy charges .
- Next January, they will receive $200 of CDC vouchers. This is on top of the $100 of vouchers distributed in May.
- In February 2023, $300 will be credited into their MediSave accounts
"There's no support in November, because the God of Fortune is taking a break to watch the World Cup," he said to laughter from the audience.
PM Lee said everyone will receive some support, but the amount each family receives will depend on its income level and housing type.
Next year, the Assurance Package - a $6.6 billion package where every Singaporean aged 21 and above will get cash payoutsranging from $700 to $1,600 over five years - will help offset the increase in GST.
These will be spread over five years, with the first payout made in December this year.
PM Lee said Singapore has faced the challenges of Covid-19 calmly and fought the battle in solidarity, and emerged more cohesive and resilient after going through this test.
"This has given us greater courage and conviction to face future crises," he said.