The Impending GST Hike – A Summary Analysis Of Various Key Economists
Following the speech by the Prime Minister, tax experts theorised potential changes to Singapore’s current tax regime, which likely features a raise in the goods and services tax (GST) from 7% to 9% in the 2018 Budget.
In July 2007, when the rate went from 5 per cent to 7 per cent, coincided with a surge in oil prices, which pushed inflation up even more.
The concern now is whether inflation will catch up as well, going into 2018 and 2019.
In addition, a higher GST rate could also deter people from spending more and weigh on overall economic growth.
Hiking the GST is politically challenging given its regressive nature. In this regard, timing is crucial. With the next general election due in 2020, policymakers will have to act fast.
It is estimated that a one percentage point hike would raise tax revenue of about S$1.6 billion to S$1.8 billion, equivalent to about 0.4 per cent of Singapore’s nominal gross domestic product.
The labour market also seems to have bottomed, but a more pronounced recovery remains visibly lacking.
Hence, introducing a sharp GST hike at this moment could result in a double whammy for some workers and households.
Following the speech by the Prime Minister, tax experts theorised potential changes to Singapore’s current tax regime, which likely features a raise in the goods and services tax (GST) from 7% to 9% in the 2018 Budget.
In July 2007, when the rate went from 5 per cent to 7 per cent, coincided with a surge in oil prices, which pushed inflation up even more.
The concern now is whether inflation will catch up as well, going into 2018 and 2019.
In addition, a higher GST rate could also deter people from spending more and weigh on overall economic growth.
Hiking the GST is politically challenging given its regressive nature. In this regard, timing is crucial. With the next general election due in 2020, policymakers will have to act fast.
It is estimated that a one percentage point hike would raise tax revenue of about S$1.6 billion to S$1.8 billion, equivalent to about 0.4 per cent of Singapore’s nominal gross domestic product.
The labour market also seems to have bottomed, but a more pronounced recovery remains visibly lacking.
Hence, introducing a sharp GST hike at this moment could result in a double whammy for some workers and households.
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