Goods and Services Tax (Amendment) Bill

Yes, it is very short. I did not hear the Deputy Prime Minister responding to my colleague, Assoc Prof Jamus Lim on this. Assoc Prof Lim was asking the Deputy Prime Minister whether healthcare expenditure, which is usually given as the main reason for increasing the GST, and that has seen a secular increase. How much is that going to be increasing in the next few years and does the rate of healthcare expenditure increase in the next few years, the projected rate, does that require urgency about hiking the GST next year or the year after?

Sir, let me take these three questions in turn.

First, Mr Leon Perera says there is a disagreement with philosophy and the main disagreement is on the slope of the growth in reserves. I would say the main disagreement is this: the Workers' Party basically wants to use more past reserves and leave behind less for our children and grandchildren – just state it honestly. There is no need to have fancy words. "Slow down the rate of growth of reserves". Basically, you are asking to use more of the past reserves and leaving behind less for the next generation. Fine, that is a legitimate position to have, but is this a wise thing to do? Is it a responsible thing to do, considering the new global environment that we are in, the uncertainties that we face, all the challenges that many Members here have spoken about. Is it wise to do it this way?

And if you think about it, if our forefathers had taken that same approach, I said in my Budget speech or in my round-up speech during the debate, if our forefathers had thought exactly the same line of thought, take 20% more of NIRC for themselves, today, we will be not just talking about a 9% GST, we will be talking about an 11% GST.

So, if we were to do the same, then the next generation – because fiscal needs will continue to grow – they will have to face a greater tax burden, not to mention having fewer resources to cope with crisis, emergencies or anything that can emerge in this uncertain world. And not to mention that we have not even talked about the more than $50 billion which we have drawn from past reserves so far, for which we are very unlikely for now, to be able to pay back. [Please refer to "Clarification by Deputy Prime Minister and Minister for Finance", Official Report, 7 November 2022, Vol 95, Issue No 73, Correction by Written Statement section.]

How can one tell whether or not in the coming years there will not be similar emergencies, pandemics, crises for which we may very well legitimately have to go to the President and ask for permission to use the past reserves.

So, in light of all of these considerations, I would say, the Government's position is very much to say today's system, do not change the parameters now. If we need revenues, we find revenues in other ways that we can do, whether through the GST increase or through other revenue raising sources.

The second point I would say is in fact, the disagreement on philosophy, is not just on reserves. Because as Mr Murali Pillai has highlighted, WP has consistently, time and again, throughout Singapore's history, basically, opposed the GST increase.

So, it is not just a philosophical matter about the reserves. It is also a philosophical matter about the GST. You fundamentally oppose the GST increase, for whatever reasons, I cannot quite fathom, because the way that we have designed the GST in Singapore is very different. I have explained this repeatedly, it does not hurt the poor, it is fair, it is effective, it is a unique system. And yet, WP continues to oppose GST and the GST increase. And that is why I surmise, the only reason you might do so, is because of a political reason, because you know this is unpopular, and therefore, it serves your political interests to oppose GST.

Third, on the macro inflation risk and the practicalities on tackling profiteering, this is not something we talk about in theory, because we have had experience doing this, through repeated rounds of doing GST increases in previous years. And the Committee Against Profiteering, each time we stand it up, has proven to be effective, has proven to be able to effectively deter any businesses from profiteering and when we catch someone, we have been able to take very quick action.

So, we have confidence in doing these sorts of things, not because of theory, but because of practical experience gained from past rounds of GST increases.

I would just like to ask the Deputy Prime Minister if he could respond to my third clarification on healthcare expenses and the urgency of introducing GST to meet healthcare expenditure in the next few years.

I forgot to talk about healthcare. I have already talked about the projections for healthcare in 2010. That is a projection that we are able to make on account of our ageing population. [Please refer to "Clarification by Deputy Prime Minister and Minister for Finance", Official Report, 7 November 2022, Vol 95, Issue No 73, Correction by Written Statement section.]

Because, remember, the elderly on a per capita spend basis incurs more healthcare spending than the young. Most of our healthcare spending is incurred when we get older, not when we are young.

Just the simple mathematics of it, as our population pyramid shifts to an older population, on that simple mathematics, healthcare spending must surely go up. That is why, we have good basis and good confidence to project in the longer term, where the trends are. The only way in which we can avoid that, is somehow magically, we have older folks spending less on healthcare. I do not know how that might even happen. I hope Healthier SG will pay some dividends but let us be realistic. Even if it helps to slow things down, I think the fact that older folks will incur more healthcare spending, I think that is not going to go away. So, the trend is very clear. The upslope is very clear.

The only other way to address this again, is, again, if we are honest, let us not spend so much for the elderly. And I am sure, no one in this House wants to take such a position. That structural increase is very clear, but on a year-to-year basis, next year, two years' time, how much more will healthcare spending go up, it is not so clear. Because there will be some lumpy investments, there may be a new hospital here; maybe for pandemic reasons, we need to enhance our infection controls.

So, these are nearer-term projections which may be slightly lumpy, a little bit more unpredictable. But the broader trend of increase is very clear and we have start preparing now for that increase.