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TAXES AND DUTIES
Goods and Services Tax (GST)
Why must the Government increase GST now when our spending needs are only in the future?
To invest for the future, we would need to start spending now. There are immediate needs to invest in education, R&D, infrastructure, and urban renewal. Programmes to provide more for the lower-income and the elderly are also pressing.
Increasing the GST when the economy is doing well and job prospects are good will also allow the Government to ease the transition to a higher GST rate for our citizens by providing an offset package. If we wait till the bulk of our spending needs are upon us before raising GST, the budget will be too tight and we will not be able to provide any assistance to help Singaporeans transit to a higher GST rate.
How will the Government ensure that the GST increase actually benefits low and middle-income Singaporeans?
As announced in Budget 2007, there will be a comprehensive offset package and it is tilted towards low-income Singaporeans so that they will receive more than the extra GST they have to pay. For middle-income Singaporeans, they will also enjoy substantial benefits to defray the GST increase. Please click
It is unclear as to why the Government has to ''tax the poor to help the poor''. If it is indeed the Government's aim to help the lower-income, why not exempt basic goods and services and impose a higher rate of GST for luxury items?
Exempting basic necessities like rice from GST is not the best way to help poorer Singaporeans. GST exemption on basic necessities will benefit higher-income households more than the middle- and lower-income groups, as the higher-income consume more of everything in absolute terms. Luxury taxes would distort consumer behaviour. The consumers of luxuries tend to be mobile enough to buy the same item somewhere else and deprive our businesses of income. It is preferable that we keep the tax flat so that its rate can be kept low and the system simple to administer. With a flat tax on all goods and services, the Government will be able to harness the additional revenue to help the lower-income to the extent that they will be better off than without the GST increase.
Can't GST be waived for medical treatment?
The increase in GST rate will not increase charges for subsidised healthcare services as the Government provides the hospitals and polyclinics direct grants to offset completely the GST they have to pay on all subsidised healthcare services.
The 3Ms framework - Medisave, MediShield and Medifund - is put in place to take care of people''s medical needs, particularly in their old age. Patients who are not able to pay for their share of the medical bills can apply for assistance from Medifund, which is an endowment fund set up specially to help the poor and needy Singaporeans pay for their medical care. Patients can use their Medisave to pay for the balance of their hospital bills, and to take up Medishield to pay for treatment of catastrophic illnesses. Furthermore, recipients of Public Assistance receive free medical treatment in our public hospitals and polyclinics.
Will the increase in GST hurt small businesses more than the big ones?
No. Small firms with turnovers of less than $1 million need not register for GST. While unregistered firms cannot claim back the GST on their purchases, they are not worse off than registered firms as they do not have to charge their customers GST on their products. This means that for the same value-add between the input supplies and the product, unregistered firms can afford to charge a lower price than registered firms.
To help small businesses who wish to register for GST voluntarily, the Government will provide a grant of up to $5000 to offset the registration-related costs such as software and training. The details can be found in
Where can I get information about the Goods and Services Tax?
IRAS publishes comprehensive information on the IRAS website relating to our GST (or VAT) system, which you may find useful. You can access the IRAS website at
to access information relating to GST.
Why is GST applicable to the water conservation tax?
The water conservation tax is a tax to discourage the excessive consumption of water. It forms part of the price, or value of water consumed. GST is a tax on the final value, inclusive of any indirect taxes or levies imposed, of any good or service consumed. Therefore, the water conservation tax is included as a part of the final value of utilities consumed to compute GST payable.
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Last Reviewed on 15 Aug 2011
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