An additional S$1.4 billion boost will be spent on the Assurance Package to help Singaporean households cope with upcoming GST hikes in tandem with rising inflation costs.
On Monday (7 November), Deputy Prime Minister Lawrence Wong announced during the second reading of the Goods and Services Tax (GST) Amendment Bill in Parliament that an extra S$1.4 billion will be spent on the Assurance Package.
This S$1.4 billion boost aims to provide more support to most Singaporean households amidst rising GST and persistent inflation in the coming months.
If the GST Bill is passed, GST will increase by 2% in two tranches:
- First tranche: Increase from 7% to 8% starting from 1 January 2023 onwards
- Second tranche: Increase from 8% to 9% starting from 1 January 2024 onwards
Naturally, this will inadvertently cause nationwide household expenditures to increase as a whole too.
As a result, this additional spending is stipulated to offset the extra GST costs incurred, covering most Singaporean households (for at least five years) and lower-income households (for roughly 10 years).
During the initial unveiling of the Assurance Package during Budget 2020, a total of S$6 billion was set aside for it. Since then, an extra S$640 million was added during Budget 2022. And now, another S$1.4 billion.
This brings the new enhanced total of the Assurance Package to around S$8 billion.
Read more:
Singapore Budget 2022: GST Hike — Increase in GST and Packages to Offload the Financial Burden
Singapore Budget 2022: 4 Small Sacrifices You Can Make To Defray The Upcoming GST Hike
Other sectors that the government has been lending greater assistance to include healthcare, social and ageing needs, and lower-income and vulnerable households via the S$1.5 billion Support Package announced earlier in June.
Since then, this Support Package was further enhanced in October with more cash and CDC vouchers being rolled out.
But that's not all.
More GST vouchers to be released
Mr Wong continues to assure that households will continually receive more GST vouchers in the near future, with the government continuing to absorb GST for subsidised education and healthcare services.
This combination of the permanent GST Voucher (GSTV) scheme and GST absorption seeks to create an overall fair and robust GST system that imposes consumption tax in an effective and controlled manner.
The GST vouchers will consist of four components:
See also: Best Credit Cards For Paying Utility Bills in Singapore 2022
The government hopes that these defrays in GST costs will better alleviate the financial burden of marginalised communities within Singapore — since "lower-income households will pay a lower effective GST rate than higher-income households", explained Mr Wong.
It is said that the effective GST for households in the first three income deciles remains unchanged at below 3%.
As we all eagerly wait for the 14-year high core inflation of 5.3% to abate, the government will continue to monitor our economy's outlook and adjust the support packages where necessary.
More details on offsetting GST expenses will also be expanded upon in next year's Budget 2023.
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