GE2025: GST hike necessary to address rising costs but Govt will take care of you, says Shanmugam

SINGAPORE - The goods and services tax (GST) hike was a necessary move to address rising healthcare expenses and an ageing population, Law and Home Affairs Minister K. Shanmugam said on April 29.

Speaking at a PAP rally for Nee Soon GRC at Yishun Stadium, Mr Shanmugam pointed out that, by 2030, for every two persons aged 20 to 65, one person will be aged 65 and older.

He said: “Healthcare costs are going up. Who is going to pay for them? How are we going to pay for them?” 

The GST hike – which was raised from 7 per cent to 9 per cent over two years, in 2023 and 2024 – has been a hot-button issue in this general election.

Opposition parties have been critical of the move, and have sought accountability for the timing and need for its implementation. The WP, PSP and Singapore Democratic Party have called for a reduction of the GST to 7 per cent or less to alleviate cost-of-living pressures.

Mr Shanmugam challenged such rhetoric and suggestions that the Government could tap more of the investment returns from Singapore’s reserves, instead of raising taxes.

“When people tell you you can spend without having to pay for something, in a few years, your future, your children’s future and the country’s future will go down,” he said.

He pointed out that the top 20 per cent of earners and foreigners pay most of the GST.

“We take that money and we distribute that to all those people who are less well off,” he said.

Mr Shanmugam added that the GST hike, by design, has been cushioned by the Government’s handouts.

“The majority of Singaporean households will get more money from the Government than they will pay in GST for five years,” he said.

“And if you are lower income, what the Government is giving you will more than pay for 10 years of GST.”

He cited the GST Voucher scheme, which helps to permanently defray GST expenses for lower- to middle-income Singaporeans.

Acknowledging that many people are concerned about the rising cost of living, he said: “Never fear... economy, jobs, living expenses – as long as you are prepared to work, the Government will take care of you.”

In a wide-ranging address, Mr Shanmugam – who was flanked by the PAP team contesting Nee Soon GRC as well as former MP Lee Bee Wah, who used to helm the Nee Soon South ward – struck a sombre note when he spoke about the global economic climate.

He spoke of the uncertainty brought about by the US move to impose tariffs and the unpredictability of US actions.

“Maybe after three months, the position will become clearer, but you and I cannot say what is going to happen,” he said, adding that while Singapore cannot control the actions of other countries, it can prepare itself.

Mr Shanmugam said: “We are not a country that waits for trouble. We prepare beforehand.”

Despite such uncertainties, he noted how discussions between Deputy Prime Minister Gan Kim Yong, who is also Minister for Trade and Industry, and US Secretary of Commerce Howard Lutnick have been positive.

The discussions include negotiating concessions for critical exports such as pharmaceuticals, as well as facilitating access to high-end artificial intelligence chips from the American market for companies here.

“I can say, without going into detail, that the discussions have been good because there is trust – but there is a long road (ahead). Both DPM Gan and Secretary Lutnick agreed that we should try to find a solution,” said Mr Shanmugam.

“If we can find a solution, it saves jobs. It saves businesses. So, we can all hope DPM Gan remains in government after May 3,” he added, referring to DPM Gan’s role as anchor minister of a four-member PAP team facing off against the WP in the newly formed Punggol GRC.

Acknowledging concerns over the cost of living, Mr Shanmugam said the best way to help Singaporeans is to ensure that they get good jobs, such as by generating investments in the Republic and creating employment for Singaporeans.

“We have already put in a lot of benefits for families because we knew some things might happen, and if they happen, we better prepare for our people... as the Prime Minister said, we will do more, if necessary.”

Besides Mr Shanmugam, the PAP team contesting Nee Soon GRC comprises four new faces: former civil servant Goh Hanyan, 39; former Nominated Member of Parliament Syed Harun Alhabsyi, 40; cleaning services and pest control company director Jackson Lam, 40; and long-time Nee Soon volunteer Lee Hui Ying, 36.

It faces a Red Dot United (RDU) team comprising party secretary-general Ravi Philemon, 56; RDU chair David Foo, 60; private school teacher Syed Alwi Ahmad, 57; tech start-up business director Pang Heng Chuan, 56; and information technology consultant Sharon Lin, 40.

This article was originally published on The Straits Times. Its inclusion on this website is solely for education purposes.