Singapore’s PM says taxes are set to increase as investment needs and social spending grow

PM Lee Hsien Loong speaks at the PAP Awards and Convention 2017 on Nov 19, 2017, at Big Box.
The Straits Times

Growing needs in the areas of investment and social services will soon cause for a rise in taxes for Singaporeans, Prime Minister Lee Hsien Loong said at the People’s Action Party (PAP) convention on Sunday (Nov 19).

A rapidly ageing population, for instance, has caused demand for healthcare services to rise sharply, the PM said.

Investments in the healthcare sector currently involve a myriad of developments from system restructure, the setting up of more hospitals and care centres, as well as enhancements to MediShield coverage with MediShield Life and ElderShield.

“These measures will keep healthcare affordable to citizens, but definitely healthcare spending by the state will go up, has already gone up.

“These investments are for our economy, for our infrastructure, and the spending on social services and safety nets, these are all necessary and worthwhile. They are a vote of confidence in Singapore’s future,” Mr Lee said.

During the Budget announcement earlier this year, Singapore’s Finance Minister Heng Swee Keat had also said his ministry was studying options for new taxes or raising tax rates “carefully”.

“Domestically, we will also face rising expenditures over the longer term as we invest more in healthcare and infrastructure,” he said.

Speaking to 2,000 PAP members on Sunday, PM Lee said: “For this current term of government, we have enough revenue. But our spending needs will grow. So Heng Swee Keat was right when he said raising taxes is not a matter of whether, but when.”

“Well before the time comes, we have to plan ahead, explain to Singaporeans what the money is needed for, and how the money we earn and we spend, will benefit everyone young and old,” he added.

According to an economist quoted by The Straits Times, the Goods & Services Tax (GST) is the second-largest generator of government revenue, after corporate and personal income tax.

The same economist said the Government could implement the tax hike as early as next year as it is not likely to raise taxes in the year before a general election.