The last time Singapore announced an increase in GST to 7 per cent was 12 years ago in November 2006. It took effect in July 2007.
Since then, there were no plans to further increase our GST.
Supporters from the opposition parties tried to dissuade Singaporeans from voting for the ruling party by distributing the “Say No to 10 per cent GST – vote wisely” stickers.
This campaign started one month before 2015 General Election.
The Finance Ministry clarified that there was no basis to claims that GST would be raised after the voting.
Indeed, it’s true. Our GST still remains at 7% two years after the last General Election.
But Singaporeans should expect to pay more for GST in time to come. It’s a matter of when, not if.
Healthcare costs will rise
Finance Minister Heng Swee Keat revealed in December last year that healthcare is expected to “rise quite sharply” over the next five years.
He expects healthcare expenditure to increase by at least S$3 billion by 2020.
Last year, Mr Heng allocated S$10 billion for our healthcare expenditure.
That means, our annual budget for healthcare will most likely be “at least” S$13 billion from 2020.
Given the growing ageing population in Singapore and the low fertility rate of 1.2 in 2016, there are not enough younger working Singaporeans to support the elderly population.
By 2020, there will be 600,000 Singaporeans aged 65 and above. By 2030, the figure will increase to 900,000.
In 2010, we only had 330,000 old folks. That means that the figure will triple in twenty years!
investment in medical tech
The Government has to ramp up its facilities (such as nursing homes) for long-term care and invest more in medical technology to provide for our greying population.
For example, they would need to purchase more bed transporters to reduce the number of nurses need to move a bed with a patient on it.
This is particularly important to help us to reduce reliance on manpower since there is a labour shortage in the healthcare industry.
There is also a new technology that can assess wounds in seconds instead of half hour – the time that a normal nurse would take.
In Khoo Teck Puat hospital, they have new robots that can transport patients’ meals to their wards without relying on nurses.
The robot is smart enough to make a few rounds to the kitchen to carry up all the patients’ meals. This can free up nurses time to work on more important and higher-value tasks.
Mr Heng already mentioned in his Budget speech in February 2016 that part of a bigger healthcare bill will be covered by new taxes or the Government raising present taxes.
So eventually when GST increases, you would be comforted to know that you’re significantly contributing towards healthcare which is a public good and necessity.
If you’re willing to eat out and shop, be glad to know that your money is going to a meaningful cause!
If you have friends from lower-income families, you can reassure them that there is a permanent GST voucher scheme in place to help them offset about half of the GST they pay each year.
Remember that GST increase is not a matter of if, but when.