During the Singapore Budget 2018, the government announced that the Goods and Services Tax (GST) will be raised in three to seven years' time.
This is largely to help prepare for the needs of an ageing population, Prime Minister Lee Hsien Loong said at the Chinese New Year celebration dinner for his ward at Ang Mo Kio GRC.
"As people grow older, even if you stay active and healthy, you are likely to need more healthcare. We will need more hospital beds, more nursing homes, and more subsidies when people go for treatment or when they are hospitalised," explained PM Lee.
In his speech, he also touched on why the government was reluctant to draw money from the reserves. "The reserves are our precious nest egg, built up over many years," and they are for rainy days, said PM Lee, adding that an ageing society and healthcare is not a rainy day – it is an “everyday need money” day.
After careful consideration, the government decided to not touch the reserves, and increase the taxes. "It is a prudent, responsible, long term approach. It is an honest one," he said. "We are responsible for this country, not just for making it work for ourselves, but we are responsible for making it work for the next generation."
Therefore, while the government does not need the money yet, PM Lee explained that by the way things are going, "by the next decade, in three or four or five years’ time, we will need the money. And we have to plan ahead, work out how we are going to get what we need to spend, and announce to people our intentions as early as possible. So that people can be prepared, will know early and will not be suddenly surprised when it happens."