Singapore Will Seek to Boost Revenue After Drawing Down Reserves

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Singapore will take steps to strengthen its revenue position to face a challenging fiscal environment caused by the Covid-19 pandemic, which has already led the country to draw deep from its past reserves, according to its finance minister.

The government intends to raise the goods and services tax to help fund growing health care and social spending needs but will carefully monitor the timing of such moves including the state of the economy and spending needs, according to Heng Swee Keat in the ministry’s addendum to the president’s address this week. It will also borrow to finance infrastructure investments, he said.

• As previously announced, GST rate increases will not take effect in 2021
• Taxes on income, consumption and assets will continue to be adjusted to achieve the right balance, while keeping tax rates competitive

The city-state has drawn on past reserves equivalent to more than 20 years of past budget surpluses to combat the fallout from the coronavirus. Singapore last week announced additional support measures of S$8 billion ($5.9 billion) to help businesses and workers, adding to some S$93 billion in earlier pledges of government aid for the economy.

“We have used a generation’s worth of savings to combat a crisis of a generation,” Heng, who is also the deputy prime minister, said. “We must therefore ensure that our fiscal balance is put back on a stable path when the economy recovers.”

The country will also continue to take a calibrated approach to immigration and maintain a careful balance in foreign worker flows, he said.

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