SINGAPORE (Reuters) – The government has yet to decide the exact pace of the expected increase from 2 percent to 9 percent, and will be careful in doing so, Finance Minister Heng Swee Keat said on Thursday.
"We will continue to monitor the prevailing economic conditions, spending trends and the dynamism of our revenues with care," he said, adding that when the walk begins, the government will provide a transitional support package to help residents tackle the problem.
In a speech responding to 55 MPs who spoke for three days, Mr. Heng noted the reservations some have raised about the approach and timing of the GST increase, which was announced in last year's Budget and is scheduled to come in some time between 2021 and 2025
Ms. Foo Mee Har (GRC of the West Coast) asked the government to postpone the planned increase for as long as possible, suggesting that funds earmarked at this stage of government, as well as the decision to use public debt to finance the infrastructure , could give room for maneuver. to postpone the walk.
But Heng said that the increase is necessary in light of health needs and other areas. This decision, he emphasized, was not taken lightly.
By 2019 alone, the Ministry of Health must spend $ 6.1 billion to subsidize patient accounts through existing permanent schemes enjoyed by all Singaporeans, he noted. This amount excludes additional expenses to increase health facilities and medical research.
As a result, the basis of health spending has increased, Heng said.
"As our population ages, spending on permanent health plans and other parts of the healthcare system will continue to grow structurally. Funding this requires a structural increase in our operating revenues," he said.
An increase in GST is therefore needed to support this structural increase in health care, among other critical needs such as pre-school education and safety, he said.
Such health spending is also of "a completely different scale and nature" of group-based packages reserved for the Merdeka and Pioneer generations, he noted in his speech.
After the speech, Labor Party (PT) MP Low Thia Khiang (Aljunied GRC) asked for clarification on how long this structural increase will last, as the largest demographic aging is the Merdeka Generation, which will decline in number over time.
WP chief Pritam Singh added that his party was against the escalation of the GST.
Last year, the WP said it supported the Budget, but voted against it because of the GST announcement. "This year, we supported the budget, but our position on GST has not changed, and I just want to make that clear," Singh said.
Responding to Mr. Low, Heng said that while House doctors do not have a definitive answer to Low's question, the government is carefully studying the variables that affect life expectancy and the cost structures of treatment.
"All I can say is that it will last for a good number of years," he said.
Laughing at the deputies, Heng said that each time he meets with Health Minister Gan Kim Yong, Mr. Gan presents a larger number of health costs.
Heng noted in his speech that raising the GST tax is also similar to measures taken by other governments facing societies that are aging.
"To cope with the rising fiscal burden of higher spending on health and demographic changes, without increasing public debt, these governments need to increase primary revenues," he added.
It is estimated that member governments of the Organization for Economic Co-operation and Development will need additional median revenue of 6.5 percentage points of Gross Domestic Product by 2060. The projected 2 percentage point GST increase is expected to raise Singapore's GDP by about 0.7 percentage point, he said. .
Heng, responding to the speech of Liang Eng Hwa (Holland-Bukit Timah GRC) on the role of accumulated surpluses in this government, said that the money will be reinvested in the national reserves. Half of the long-term reserves returns can be spent on future budgets as part of the Net Investment Returns structure.
These contributions to the reserves are part of the government's obligation to prepare for future uncertainties, he said, citing Mr. Murali Pillai's address to Bui Batok. "Any surpluses we have do not just disappear by the end of the term."
Recalling his job as managing director of the Monetary Authority of Singapore during the 2008 financial crisis, Heng said that surpluses and past reserves can help the government provide targeted support to people who need help to cope with falls.
"In planning for this financial year, we are also faced with the global economic outlook being downgraded by the International Monetary Fund (IMF) as global trade tensions have grown," he said.
Last month, the IMF reduced its global growth forecasts to 3.5% by 2019 and 3.6% by 2020, its second quarterdown in three months.
Many commentators have said in recent days that the surpluses accumulated in this government allow the government to post deficits of up to $ 18.8 billion over the next two years.
Heng said, "Fundamentally, we should not have the mindset of trying to spend everything we have before the end of each term.
"As part of our long-term approach, we continue to review our plans and deploy financial resources where necessary."