Speaking in Parliament on Monday (Jul 4), Lawrence Wong said it would be “highly irresponsible” to delay the increase in the Goods and Services Tax.
He explained that the government is expecting its spending to increase, largely driven by the rapidly ageing population and healthcare expenditure. Deputy Prime Minister Lawrence Wong said that the economy is operating at slightly above potential, with a tight labour market and an overall unemployment rate that is lower than pre-Covid-19 levels.
“Under such circumstances, we had to consider carefully the size of any additional support measures by the Government – because excessive fiscal injections at this juncture can exacerbate inflationary pressures and become counterproductive,” he said.
This is why the latest support package was designed to provide more targeted relief for the lower-income and vulnerable groups who are disproportionately impacted by higher prices.
He said that Singapore has used a combination of monetary, fiscal and other policies to cushion its people from the extremes of global inflation while targeting help to those who need it most and helping businesses adjust to higher prices for now and the medium term.
“But what we will try very hard to do is to provide short-term relief, and in the process of providing that relief we will also want to encourage businesses, families, individuals, wherever possible, to become more energy-efficient, for businesses to become more productive,” he said.
The Government expects its spending to rise to 20 per cent of annual economic output, or gross domestic product, by 2030 — up from 18 per cent now, Mr Wong said. “There are cost increases, higher prices, lots of constants and anxieties, and we will do our best to deal with them. But we cannot neglect the medium- and longer-term challenges either,” he added. /TISG
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