SINGAPORE: Louis Chua Kheng Wee, Workers’ Party Member of Parliament for Sengkang GRC, has reaffirmed the party’s commitment to seeking and advocating measures to alleviate the mounting price pressures that Singaporeans are grappling with.
In a Facebook post dated the 19th of this month, he highlighted that his recent discussions with residents consistently centered around the growing impact of the continually surging cost of living, which has become a pressing concern for many households.
He noted that a flyer distributed by a real estate agent vividly illustrates the challenging situation, depicting how HDB resale prices and COEs persistently reach new record highs.
He expressed his aspiration for the exploration of additional measures to alleviate the price pressures confronting Singaporeans, proposing the possibility of delaying, if not completely negating, the impacts of the upcoming GST rate increase in 2024.
This was one of the suggestions he presented during a parliamentary session earlier this month.
Mr Chua stresses imbalance between Singaporeans’ cost of living crisis and Government’s fiscal strength
On the 3rd of October, during a Parliamentary debate on the Income Tax (Amendment) Bill, Mr Chua raised an urgent concern about the escalating cost of living crisis faced by ordinary Singaporeans.
While acknowledging the introduction of the one-off S$1.1 billion Cost-of-Living Support Package on the 28th of September 2023, he cautioned against the recent surge in prices of essential commodities, which could persist into the foreseeable future.
Notably, electricity prices rose by an average of 3.7% compared to three months ago, and gas prices by 2.3%, with a 7% projected increase in public transport fares next year, alongside an additional 15.6%-point rise in future fare hikes. Unleaded 95-octane petrol is also nearing S$3 a litre, and COE prices continue to reach new record highs.
Furthermore, the secondary effects of inflation from escalating basic utility and transportation costs, as well as shocks to global energy and food commodity prices, have yet to fully manifest on consumer prices, potentially leading to persistent price pressures in 2024.
During the debate, Mr Chua emphasized the Government’s better-than-expected fiscal position in the last two financial years, signalling a potential surplus of approximately S$3 billion in FY2022. Additionally, the Government anticipated record-high operating revenues of S$96.7 billion in Budget 2023, primarily driven by corporate income tax, personal income tax, and GST revenues.
As of the first five months of the financial year, operating revenues have already surpassed expectations, exceeding the projected increase for the entire year, while expenditures have remained stable during the first quarter of FY2023.
Mr Chua emphasized the evident contrast between the critical issue of the cost of living crisis, which poses a threat to the living standards of many Singaporeans, and the anticipated robust fiscal position of the Government, alongside expectations of another year of record-high collections of corporate income tax, personal income tax, and GST.
He expressed a sense of imbalance and injustice resulting from this stark disparity.
During the Budget 2023 debate, Deputy Prime Minister Lawrence Wong emphasized the impending nature of the GST increase to 9% in 2024, citing that deferring it would only lead to the accumulation of more challenges for the future, potentially leaving the government with insufficient resources to support the increasing number of seniors.
In Budget 2022, DPM Lawrence Wong shared that the GST hike will bring in about 0.7 per cent of GDP in revenues annually, or about S$3.5 billion when the full hike is in place in 2024.
“Even with a one percentage point increase in the GST thus far, the Government expects GST revenues in FY2023 to be S$2.9 billion higher than FY2022. Close to what the full GST hike was supposed to bring in. If we compare FY2023 GST revenues against that in FY2021, then GST revenues would be S$4.7 billion higher. ”
In response, Mr Chua argued that with the government’s revenues already exceeding initial projections within the first five months, delaying the second phase of the GST increase might not be as challenging as suggested.
“Will this delay result in us storing up “more problems for the future, and will leave us with less resources to take care of our growing number of seniors” as shared by DPM Wong during the Budget 2023 round up speech? ”
“I leave Singaporeans to draw their own conclusions.”
Senior Minister Chee Hong Tat defends the necessity of GST increase
In response to Mr Chua and the Workers’ Party’s proposal to postpone the GST increase in 2024, Senior Minister of State for Finance and Transport, Chee Hong Tat, reiterated the necessity of the GST increase, citing Singapore’s ageing population and the anticipated rise in healthcare costs.
While Government expenditure is expected to increase from the current 18% of GDP to potentially over 20% of GDP by FY2030, he said this has yet to account for additional spending that may arise from new policy initiatives, including the need to further invest in resilience and to strengthen our social compact and economic competitiveness.
On the revenue side, Mr Chee said Singapore’s tax revenue collections have grown broadly in line with GDP. The higher tax revenue collection in FY2022 compared to the previous year is due to our economic recovery after the COVID-19 pandemic.
However, he cautioned that It is unclear whether the trend can continue, given the uncertain global macroeconomic outlook.
“In the medium term, revenue generally does not grow faster than GDP without tax rate changes. This is why the revenue measures announced at the recent Budgets, including the GST increase this year and next year, remain necessary to meet our medium-term spending needs. ”
Mr Chee reiterated that deferring the GST increase would only lead to the accumulation of more challenges in the future, resulting in fewer resources to address Singapore’s growing fiscal needs.
Chee Hong Tat also highlighted the government’s commitment to sharing fiscal surpluses with Singaporeans through various relief measures, such as the Cost-of-Living Support Packages, which include increased CDC vouchers and special payments for eligible Singaporeans.
He stressed that the Assurance Package has effectively delayed the impact of the GST increase for the majority of Singaporean households by five years and even longer for lower-income households.
He also mentioned that Budget 2023 maintains a balanced approach, focusing more on supporting lower- and middle-income groups while providing some assistance for all Singaporeans.
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