Wednesday, 8 March 2017

Will GST rates increase in Singapore?

The Singapore Budget 2017 debates continue to rumble on in Parliament, and should finish this Friday. There were many valid points raised and the discussion has been lively, and not without controversy.

For instance, one of yesterday's debates seemed to picture the Government indulging in evasive tactics when questioned about a possible GST hike in the near future. Low Thia Khiang, leader of the Workers' Party, voiced concern as to how would all the planned expenditure for healthcare and infrastructure in the coming years be funded.

Lawrence Wong, the second Minister for Finance, chose his words carefully in his response, and, while insisting that the Government is exploring all possible options, did not flat out dismiss the possibility of a GST rate increase.

This year's Budget saw a limited number of GST initiatives to help the populace cope with overall price increases, in particular the water price hike that was also announced on the same day, but it seems a GST rate increase may be inevitable.


The last time the GST rate was increased was 10 years ago in 2007, when it increased from 5% to its current rate of 7%. (GST was first introduced way back , at a rate of 3%). Back then, the increase came together with a substantial 'offset' package that was designed to help cushion the impact. It was also accompanied by a continued decrease in income tax rates.

In the current backdrop of economic uncertainty, a hike in the GST rate might not have such bosom buddies. Singapore's income tax rates are already one of the lowest in the world, and are unlikely to decrease significantly any further. Any packages to help cope are unlikely to be of significant value to actually be considered 'offsetting' the overall impact of a GST hike.

The Committee for the Future Economy report had a long term outlook and agenda. Certainly that should be the way to go for most Singapore businesses today. Instead of undertaking unnecessary cost-cutting measures to maintain an unrealistic profit margin, take whatever hits you have to today, but build towards a stronger future!

Azmin Mohd Khalib
Senior Editor
Wolters Kluwer

-------------

p.s.: If you are interested in the future of Singapore GST, why not sign up for our 2017 Singapore Budget and Tax Outlook event? It's this Friday morning (10 March 2017), at Singapore Marriot Tang Plaza, and one of our featured guests is Ms Gan Hwee Leng, Partner for Indirect Tax at KPMG, and she'll be discussing recent GST developments as well as its opportunities and challenges. There's still time to sign up, so head over to our webpage or contact your favourite Accounts Manager now!

1 comment:

  1. I am truly pleased to read this weblog post which includes tons of helpful information, thanks for providing these data. GST HSN CODE

    ReplyDelete