If the GST increase from 7% to 9% is all you got from Budget 2022, here’s some more important information that you’ll need to know — from effective dates to the government-implemented packages to help Singaporeans cope with the increase in expenses.
The Goods and Services Tax (GST) has always been a bane whenever it comes to dining in at restaurants or purchasing from retail shops. Though 7% seems like a measly amount, it can actually eat quite a bit into our expenses. Yet, this mandatory tax forms a significant portion of Singapore’s yearly revenue.
Since the previous Budget in 2021, the Government has announced its intention to increase the GST rate from the current 7% to 9% within the period of 2022 to 2025.
During this year’s Budget 2022, we collectively heaved a sigh of relief as it is announced that the GST increase will only take effect from 1 January 2023 (instead of this year, as many speculated).
In case you missed the live broadcast of Finance Minister Mr Lawrence Wong speaking at Budget 2022, here’s a lowdown of what you need to know about the GST increase.
GST hike to be rolled out in two phases
To ease Singaporeans into the GST hike, the GST will be raised in two phases over the period of two years:
- Increase from 7% to 8% with effect from 1 January 2023
- Increase from 8% to 9% with effect from 1 January 2024
Finance Minister Lawrence Wong believes that the GST hike is essential to support Singapore’s healthcare expenditure and take care of its senior population.
Mr Wong further clarified that the GST on publicly-subsidised healthcare and education will be absorbed by the Government, while Town Councils will receive an additional S$15 million per year to absorb the additional GST payable on Service and Conservancy charges.
There will also be no increase in government fees and charges for one year from 1 Jan 2023. The fees include licence fees (aka driving licence fees) and fees charged by government agencies for the provision of services. These include school fees (including those for Institutes of Technical Education and polytechnics), public carpark charges and electronic road pricing (ERP) charges.
This means that you can still enjoy the current GST of 7% for the rest of the year till the hike comes into effect. Shopaholics and foodies alike should aim to make their big purchases before 2023 to maximise savings!
Government schemes and packages for financial support
This GST hike will undoubtedly affect all Singaporeans, as this means that every purchase or dine-out will result in an increase in expenses.
Thankfully, the government isn’t going to leave us in the lurch. They will be rolling out several schemes and packages to cushion the hike by providing financial support.
The government will be setting aside S$6.6 billion for the Assurance Package with the aim of offsetting at least five years’ worth of additional GST expenses for the majority of Singaporean households.
If you belong in a lower-income household, you can expect to receive offsets up to about 10 years’ worth of additional GST expenses.
Here are some rebates and payouts you can expect to receive.
|Beneficiaries||Total amount||Payout period|
|All adult Singaporeans||S$700 to S$1,600 cash payout||Five years, from 2022|
|All Singaporean households||Two tranches of S$200 Community Development Council (CDC) Vouchers||Disbursed in 2023 and 2024|
|Eligible HDB households||S$330 to S$570 additional GST Voucher (GSTV) — U-Save rebates||Four years, from 2023|
|Singporeans aged 55 and above||S$600 to S$900 GST Voucher (GSTV) — Cash (Senior’s Bonus)||Three years, from 2023|
|Singaporean children aged 20 and below and seniors aged 55 and above||S$450 MediSave top-ups||Three years, from 2023|
Enhanced GST Vouchers
On top of the Assurance Package, the Government will further be adding an additional S$640 million to improve the GST Voucher (GSTV) scheme.
Currently, the permanent GSTV scheme has three components — cash payout, Medisave top-up and utilities rebates. But under the enhanced GST Vouchers scheme, the service and conservancy charges rebate will be made a permanent component of the GSTV scheme.
The assessable income ceiling for GSTV — Cash will be increased from S$28,000 to S$34,000 so that more Singaporeans will be eligible. The total quantum also be raised to S$500 for those living in households with annual values of S$13,000 and below, and to S$250 for households of annual values between S$13,000 and S$21,000.
These enhancements aim to offset GST expenses for lower- to middle-income households and most retiree households beyond the transitional period that is covered by the Assurance Package.
It will fully offset the total GST that retiree households living in one- to four-room HDB flats have to pay. Low-income households with no elderly members will have up to half of their additional GST expenses offset.
These enhancements are implemented with the goal of reducing the extra financial burden on low-income households and neutralising the impact of the GST hike.
Both schemes will be implemented concurrently before the GST hike takes effect, to help cushion the financial burden for all Singaporeans.
With the GST hike looming in the near distance, we should all be more prudent with our expenses and save whenever possible.
Whether it’s through investments, raking up cashback or exercising a little more self-control to reduce impulse buys, these small actions can go a long way in helping to cushion the GST increase.
Read these next:
Singapore Budget 2022: Key Highlights And Summary
Singapore Budget 2022: 4 Small Sacrifices You Can Make to Defray the Upcoming GST Hike
Singapore Budget 2022: 6 Things You Didn’t Know You Could Spend Your CDC Vouchers On
Singapore Budget 2022: How Rich Must You Be To Be Affected By Wealth Tax?
Singapore Budget 2022: 6 Ways It Will Impact You
By Deborah Gan
A mahjong addict with an undying love for dogs, Deborah is always on the hunt for cheap deals because she is always broke. That is why she is attempting to be more financially savvy to be.. less broke.