Singapore is preparing for a second phase of its goods and services tax (GST) increase in 2024, raising it by one percentage point to 9%. This comes after an earlier increment from 7% to 8% earlier in the year. The move is part of the government’s efforts to strengthen its financial position as it anticipates increased social spending, particularly in healthcare, due to the city-state’s rapidly ageing population. With a quarter of the population expected to be 65 or older by 2030, the government argues that the tax adjustment is necessary to address the future challenges of healthcare expenses and population ageing.
Opposition lawmakers have called for a delay in the implementation of the tax hike, citing concerns over the already escalating cost of living. Core inflation in Singapore moderated to 3.2% in November from its peak of 5.5% earlier in the year, but it remains stubborn, with the central bank projecting an average of 2.5–3.5% in 2024.
Deputy Prime Minister Lawrence Wong defended the decision, stating that deferring the GST increase would only lead to more significant challenges in the future, limiting resources to address growing fiscal needs. To mitigate the potential burden on households, the government has introduced an “assurance package” worth over S$10 billion ($7.55 billion). The package includes payouts ranging from S$200 to S$800 distributed to all adult Singaporeans. While concerns arise over the impact on citizens, relief measures aim to alleviate immediate financial strain.
Some retailers, such as IKEA and FairPrice Group, have pledged to absorb the tax increases temporarily. IKEA has not specified when it will conclude the initiative, and FairPrice Group has committed to absorbing the hike on essential items like rice and vegetables.
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