Singapore government has decided to hike its sales tax to 9.0 per cent from 7.0 per cent after the city-state’s next general election, which is due to be held by January 2021.
The Goods and Services Tax (GST) rate change will come “sometime” between 2021 and 2025, reports Reuters.
The Finance Minister Heng Swee Keat said, “The exact timing will depend on the state of the economy, how much our expenditures grow, and how buoyant our existing taxes are. But I expect that we will need to do so earlier rather than later in the period.”
Jeff Ng, chief economist Asia for Continuum Economics, said “The surprise for us was that the planned increase was for a much later period.”
“This eases the need for a future government or administration to announce the Goods and Services Tax,” Ng said.
The finance minister announced a “one-off” bonus in 2018 of up to S$300 ($228.50), depending on their income. The bonus comes after Singapore’s trade-reliant economy grew 3.6 per cent in 2017.
Singapore introduced a GST in 1994, with a 3.0 per cent rate. This was raised to 4.0 per cent in 2003 and 5.0 per cent in 2004, then to 7.0 per cent in 2007.
The current rate is among the world’s lowest for a consumption tax.