A responsible Govt that looks after people & plans ahead in a sustainable way — the S$1.4b top up to Assurance Package


The PAP Government looks after Singaporeans and plans ahead to meet future needs in a sustainable manner, reiterated Deputy Prime Minister Lawrence Wong.

And to meet the committed levels of help for Singaporeans, he announced that S$1.4 billion will be topped up to the Assurance Package to reach a total of S$8 billion.

“This ensures that the package continues to offset additional GST expenses for the majority of Singaporean households for at least five years, with around 10 years offset for lower-income households,” said DPM Wong during the GST amendment bill debate today (Nov 7).

The top up was due to the higher inflation this year and in the coming years. More details of the top up will be announced at next year’s Budget.

“For those who asked the government to delay the GST rate increase. The Assurance Package, in effect, does precisely that for the majority of households.”

In total, the cash and other forms of support under Assurance Package amount to what most citizens will pay in additional GST for at least 5 years.

Important design of the GST system

“The Government will help all Singaporeans adjust to the GST increase, especially the less well of. We will help every Singaporean family through the Assurance Package,” the DPM said.

Other than the newly-enhanced S$8 billion Assurance Package to cushion the impact of the planned GST increase, there’s also the S$3.56 billion support packages, which are designed to fight cost of living pressures.

There’s also another important design of the GST system, added the DPM — the permanent GST Voucher scheme and absorption of GST for education and healthcare.

The GST vouchers help lower to middle income households defray a significant part of GST expenses permanently and include four components: 1) cash 2) Medisave top ups for seniors 3) USave rebates and S&CC rebates.

“So after putting together the permanent GST Voucher and the GST absorption, what we have is an overall GST system that taxes consumption in a fair and effective manner.”

DPM Wong added that our GST system is tiered by income levels, with lower-income households paying a much lower effective GST rate than higher-income households.

“As I had explained in the Budget this year, on average, the bottom 10 per cent of households do not pay any GST at all after the permanent offsets. This includes many retiree households without income.”

“And even after the GST increase, the effective GST rate for households in the first three income deciles remains unchanged at below 3 below. This means that the GST increase will not negatively impact them.”

Instead the full impact of the GST will be borne largely by higher income households as well as tourists and foreigners who are based here, he added.

Expanding support for Singaporeans

At the heart of the planned increase of the GST to 8 per cent from Jan 1, 2023 and to 9 per cent from Jan 1, 2024, is to provide additional resources to meet the growing healthcare expenditures and to take care of the growing number of our seniors.

DPM Wong also stated that the Government has been expanding support while improving social mobility.

“We have been expanding support for their (Singaporeans’) needs, including our healthcare, social and ageing needs, and we will continue to do more. We also want to improve social mobility invest in skills upgrading and green our economy and city.”

To achieve all that, there’s a need for more government spending, both structural and recurring. And that’s why DPM Wong raised a slate of taxes during Budget 2022 such as personal income tax, property tax, ARF rates for vehicles and GST.

“So this is how as a responsible government, we plan ahead and we meet our future needs in a sustainable way,” he said.