SINGAPORE: The rising cost of living in Singapore extends “far beyond” the Goods and Services Tax (GST) hike, Prime Minister Lawrence Wong said on Monday (3 Mar), defending the government’s decision to raise the tax.
In a YouTube video titled Tackling Cost Pressures, Wong acknowledged Singaporeans’ concerns about inflation, noting that many families were struggling with higher prices.
“I know that for many Singaporeans, the biggest concern is the cost of living, and understandably so. Prices have gone up, and it is tough for many families,” he said.
Addressing concerns about the GST hike, Wong stated, “Some wonder if the GST increase has made things worse. But let’s be honest, the reality is that what we are facing goes far beyond the GST.”
His remarks came days after the Budget debate, where the rising cost of living was a key issue.
Workers’ Party (WP) chief Pritam Singh had criticised the government’s decision to raise GST, arguing that it had “turbocharged inflation.”
Wong rejected this claim in his Budget round-up speech last week, stating that external factors were the primary drivers of inflation.
He pointed out that despite the GST increases, inflation—measured by the Consumer Price Index—had actually fallen over the past two years.
In the video, Wong cited global supply chain disruptions and conflicts as major contributors to inflation, stating that no country had been spared.
“We feel the pressures here in Singapore too, especially as a small and open economy. After all, we import almost everything we consume,” he said.
Reflecting on the financial strain caused by the COVID-19 pandemic, Wong described it as “a time of great uncertainty.”
He noted that the government had to seek approval from the President five times to use past reserves.
“Our finances were stretched. Even after the pandemic, we had to ensure we had enough resources to support economic recovery, create jobs, and care for our ageing population,” he said.
He reiterated that the GST increase was a necessary but difficult decision.
“It was not an easy choice, but we knew we had to act responsibly. That is why when the economy showed signs of stabilising, we decided to proceed with the GST increase.”
To mitigate the impact, Wong highlighted the Assurance Package, introduced to “effectively delay the impact of the GST increase” for most Singaporeans.
Initially announced in the 2020 Budget, the package provided $6 billion to cushion the effects of the hike and has been enhanced over the years.
“In this Budget, we have provided additional measures to further ease cost pressures, including a special SG60 package with more help for every Singaporean,” he said.
The SG60 package will provide $600 in vouchers to all Singaporeans aged 21 to 59 in 2025, while seniors aged 60 and above will receive $800.
“We will keep doing what is necessary to help Singaporeans through these difficult times and for as long as it is needed,” Wong assured.
GST Hike Sparks Public Backlash
However, many Singaporeans remain unconvinced by these reassurances, with social media flooded with criticism over the rising cost of living.
Across CNA, Mothership, and The Straits Times’ Facebook pages, more than 2,000 comments were posted, with many expressing frustration that price increases have far outpaced the 1% tax hike.
One user highlighted that people are struggling to feed their families while working until old age, yet the government continues to raise GST without concern.
Another user argued that raising GST twice has caused hardship and worsened inflation.
They pointed out that vouchers, rebates, and cash subsidies are only temporary solutions, while prices continue to rise permanently. They added that once prices go up, they rarely come down.
A different user noted that in a free market, food prices are not controlled. Although GST increased by 2%, food prices have surged by much more.
They warned that this would significantly impact middle-income earners and be even more challenging for lower-income groups.
Another commenter criticised the government, stating that while GST was raised by 2%, prices had shot up by 20%.
They questioned how this could be justified and argued that, despite various explanations, the real impact was on people’s welfare.
Businesses Accused of Exploiting GST Hike
Some users also claimed that businesses had taken advantage of the GST hike to unfairly raise prices.
One user argued that the move from 7% to 8%, then 9%, was poorly planned, as many retailers and hawkers used it to increase prices twice.
They cited an example where a $3.00 bowl of noodles rose to at least $4.50 after both hikes.
One commenter added that the GST hike triggered a snowball effect of price increases, with many businesses exploiting the situation.
Netizens: GST Hike Could Have Been Delayed
Some user argued that the GST hike could have been delayed.
One user questioned whether raising GST was the right choice at the right time.
While acknowledging it was not an easy decision, they argued it was like adding fuel to an already blazing fire rather than causing the problem.
One user commented that the GST hike was unbelievable and rubbed salt into their wounds.
They said it did not make sense, as the second increase could have been delayed given the already high prices everywhere.
Another user pointed out that the second 1% hike could have been postponed, given the $6 billion tax surplus.
They argued that as base prices rise, tax revenue naturally increases, making the hike unnecessary.
One commenter said the GST hike worsened inflation, further driving up prices.
They criticised the timing, noting that the $6.6 billion budget surplus showed a delay was possible.
Another user warned that the government was experimenting with people’s lives through inexperienced fiscal planning.
They argued that the GST increase not only raised living costs but also drove up business expenses, potentially harming the country’s competitiveness.
They hoped this would remind the government to assess the impact carefully before considering a further hike to 10% after the election.
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