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The Assurance Package will delay the GST hike for majority of households by 5 years

GST, household, package, permanent, scheme, assurance, NET, tourist, increase, voucher

The bulk of the GST burden is borne by tourists and foreigners living in Singapore, as well as the top 20% of resident households, Senior Minister of State for Finance, Mr Chee Hong Tat said in Parliament.

Around $5.7 billion were collected in NET GST annually in 2018 and 2019.

This is after netting off refunds under the Tourist Refund Scheme ($200 million a year) and after netting off GST Vouchers of over $1 billion provided annually to Singaporean households.

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Of the net $5.7 billion GST collected, tourists and foreigners living in Singapore accounted for 50% of it. The top 20% of resident households account for close to 20%. 

This means 30% of the net GST collected is spread over 80% of resident households.

The bulk of the GST, as stated earlier, is borne by tourists, foreigners living in Singapore and the top 20% of households here.

Data for 2020 and 2021 are not used as they are not representative of general consumption patterns due to the pandemic. The tourist refunds in 2020 and 2021 were much lower, averaging at around $22 million per year, due to travel restrictions associated with COVID-19.

GST increase

The GST rate increase of 1% in 2023 and another 1% in 2024 is an important revenue move that will provide us with additional resources to meet our growing healthcare expenditures and to take better care of our growing number of seniors. These are our parents and grandparents.

The Government will help all Singaporeans adjust to the GST increase, especially the less well-off.

DPM Lawrence Wong

Delay GST hike? Your wish is granted!

The $6 billion Assurance Package is now $8 billion, taking into account the elevated inflation situation.

For those who ask the Government to delay the GST rate increase, the Assurance Package in effect does precisely that, for the majority of households.

With the enhancement to the original package, the Assurance Package will delay the GST hike for the majority of Singaporean households by at least five years. And for lower-income households, the Assurance Package will delay the GST hike for them by around 10 years. 

This is because the cash and other forms of support under the Assurance Package amount to more than what most citizens will pay in additional GST for at least 5 years.

GST is permanent. The GST Voucher Scheme is also permanent.

You’ve heard it said that GST is permanent but the Assurance Package is temporary. What is left (deliberately) unsaid is the permanent GST Voucher Scheme.

The permanent GST Voucher Scheme is an important design feature of the GST system in Singapore. In addition to this scheme, the Government also absorbs GST for publicly subsidised education and healthcare services.

This permanent GST Voucher Scheme has 4 components. 

Each of the four components provides support for various household needs –

  • Cash for immediate needs; 
  • MediSave for seniors to support their medical needs; 
  • U-Save to offset utilities bills; and 
  • S&CC Rebate to offset S&CC bills.

Multi-tiered GST System

After taking into account the permanent GST Voucher Scheme and the fact that the Government also absorb GST for subsidised education and healthcare, in effect, what we have is a multi-tiered GST system.

It is one that is tiered by income levels, with lower-income households paying a much lower effective GST rate than higher-income households.

Even after the hike, the effective GST rate for the bottom 30% of households remains unchanged at below 3%. This means that the GST increase will not negatively impact them. 

The full impact of the GST will be borne largely by higher-income households, as well as tourists, and foreigners who are based here – and this is also the group that contributes the biggest share to net GST revenues from households and individuals.

DPM Lawrence Wong
sgmatters.com the assurance package will delay the gst hike for majority of households by 5 years the assurance package will delay the gst hike for majority of households by 5 years

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