Singapore’s Lee Signals New Tax Details to Come in Next Budget
(Bloomberg) -- Singapore Prime Minister Lee Hsien Loong signaled Friday that tax changes are likely to be announced in the upcoming budget in February as the government seeks to lay the groundwork for its future spending.
“We have seen this need coming for some years,” Lee said in his annual New Year’s address, citing funds needed for social programs and expanding its healthcare system. “Now that our economy is emerging from Covid-19, we have to start moving on this.”
Lee’s comments come as the financial hub expects gross domestic product to expand 3% to 5% next year, slower than this year as travel, consumer and construction activities are yet to reach pre-Covid levels. It also follows the government drawing “heavily” on past reserves in its fight to support the economy through the pandemic, Lee said, and running a budget deficit for two consecutive years.
While a proposed hike in the GST, currently at 7%, had been delayed by the pandemic, the government had said it would move ahead with the increase as soon as 2022. Policy makers are also exploring options for taxing other forms of wealth besides property.
“Those who are better off should contribute a larger share, but everyone needs to shoulder at least a small part of the burden,” Lee said. The upcoming budget, which will be delivered on February 18, will “lay the basis for sound and sustainable government finances for the next stage of Singapore’s development,” he said.
The government in 2020 set aside a S$6 billion ($4.4 billion) package that will delay the impact of a higher GST for the majority of Singaporean households for at least five years. Lower-income families will not experience an increase for 10 years, according to that plan.
In his message, Lee said the country can be “quietly confident” that it can cope with the impact of omicron variant even though it’s not completely out of the woods yet. Singapore’s position now is “greatly strengthened” compared to two years ago amid a ramped up vaccination drive that now includes young children, he said.
“We will safely expand cross‐border travel and re‐connect with the rest of the world, omicron permitting,” Lee said. “We will also press on to bring in much needed migrant workers, and ensure international talents feel welcome and are able to complement Singaporeans.”
Singapore, with one of the world’s highest vaccination rates, is pushing ahead with its strategy to treat the virus as endemic without overwhelming the health care system or experiencing the death toll seen in Europe and the U.S. After a few months of the delta wave where daily cases were in the thousands, Singapore’s daily infections have dropped to the hundreds in the past week. Hospitalization and intensive care numbers have similarly dipped.
The Southeast Asian nation has detected over 400 omicron cases so far but it hasn’t tightened social restrictions, as it tries to stay the course in its reopening path and avoid dialing back on easing as it had previously done. 87% of its total population is fully inoculated, while 40% have gotten their booster shots.
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