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Politics

Opposition and activists up in arms over Singapore's plan to hike GST

Ruling party says tax rise should not be an election issue

Singapore Prime Minister Lee Hsien Loong's government plans a GST hike for 2021-2025.   © Reuters

SINGAPORE -- Singapore's Workers' Party, the main opposition, said Thursday it would not support government plans to raise the goods and services tax as an activist plans a rare protest in one of the costliest cities in the world.

The People's Action Party that has governed Singapore for nearly six decades said earlier this month that it planned to raise GST to 9% between 2021 and 2025 from the current 7%, to support rising expenditure on health care, security and infrastructure. The government had stressed the need to boost coffers to support an aging population.

The government said it had budgeted for a primary deficit of 7.34 billion Singapore dollars ($5.53 billion) in the fiscal year starting in April as it expects expenditure to rise by 8.3% to S$80.02 billion, and revenues to fall 3.3% to S$72.68 billion. It expects to spend S$10.23 billion on health care in fiscal 2018, marking a tripling of the figure for 2010.

On Thursday, parliament ended a three-day debate over the 2018 budget and fiscal policy, during which the GST hike was a hot topic. "We are unable to support the announcement of the GST hike," said Sylvia Lim, a member of the Workers' Party.

Singapore says it needs a revenue boost to meet the demands of a rapidly aging population. (Photo by Kentaro Iwamoto)

Another member of the Workers' Party Pritam Singh said Tuesday that his party could not support the government because of a "lack of clarity surrounding projected expenditure when government raises GST in the future" and "relative lack of information on whether there is scope for the reserves to better support Singaporeans."

He also suggested the government could seek other sources to support expenditure, such as using revenue from land sales.

Finance Minister Heng Swee Keat defended the plan by saying that raising taxes was "the responsible way." He also pointed to the fact that the government had made the announcement in plenty of time.

Singapore is expected to hold its next general election by January 2021. Addressing the Workers' Party members on Thursday, Heng stressed that "I hope that when elections come around, the WP won't use the GST to distract people from longer-term issues that we face."

But it isn't just the politicians that are up in arms. Opposition voices are also rising from the grassroot level. Activists plan to protest the GST hike on Saturday in a park in central Singapore where demonstrations are almost unheard of and where public assemblies require police permits.

"We have already bear the tag of being the world's costliest city in the world for many years running and a GST increase will only make things worse for the people who also struggle with low wages," said the organizer Gilbert Goh, who is planning the gathering on Facebook.

In a Facebook post, Goh wrote: "Life will get tougher moving forward and Singaporeans will now need to tighten up a lot to make ends meet. There will probably be more depressed [people], suicides and bankrupts as we struggle with our low income and high cost of living."

Goh claims that the government can deploy the reserves in sovereign funds to support expenditure.

But the finance minister said on Thursday, referring to the reserves: "However much Singapore developed, we must be prepared to deal with unforeseen events and crisis which can have very significant impact on Singapore and the world."

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