GST Hike: The easy path vs the honest path

This is what an Honest Government does, being upfront, confronting the realities, taking the difficult path, and explaining to Singaporeans why this is necessary. 

Hopefully, Singaporeans will be able to see the larger picture. 

On the need to raise GST, Finance Minister Heng Swee Keat said that it was a difficult decision and it was difficult news for Singaporeans, but it was a decision the Government came to after having scrutinized all possible alternatives.

Raising corporate tax, for instance, was not appropriate when other countries are reducing corporate taxes.

So a corporate tax hike could have "unpredictable consequences" - including the possibility of businesses shifting out of Singapore.

The tight fiscal position Singapore is in is not just for a year or two but over the long run.

The $9.6 billion surplus for FY2017 was due to exceptional factors - a buoyant property market brought in higher stamp duties and financial market fluctuations led to a big jump in investment returns for the Monetary Authority of Singapore (MAS).

Such factors can always turn the other way round, as Min Heng said and we cannot assume that they will always be positive.

The easy way, Mr Heng said, is to "put our heads in the sand, pretend that there's no problem and then go on and assure everybody that, look we have a wonderful big surplus in this year's Budget and, therefore we are okay, but I don't think that will be honest and I would not want to do that."

This is how an honest government looks like. 

You know where the surplus comes from and you know where it is going.

Speaking at a forum organized by Bank of Indonesia and the IMF, DPM Tharman Shanmugaratnam said:
"The Budget announcement of a future increase in GST from 7 to 9 per cent is a part of the balance that we are striking. 

That balance between staying competitive, ensuring that we can grow at a sustainable pace, but at the same time staying inclusive, and in particular, being able to afford the quality healthcare that an ageing population needs - that's foremost on our minds."