SINGAPORE: The Government will have to start moving on the planned hike in Goods and Services Tax (GST) in Budget 2022, given that the economy is emerging from COVID-19, said Prime Minister Lee Hsien Loong in his New Year message on Friday (Dec 31).

The plan to raise the GST by two percentage points, from 7 per cent to 9 per cent, was first announced in 2018 during then-Finance Minister Heng Swee Keat's Budget speech. He said the increase would be necessary to strengthen Singapore's revenues, given recurrent increases in healthcare, security and other social spending.

"Increasing GST by two percentage points will provide us with revenue of almost 0.7 per cent of GDP per year."

"Without the GST rate increase, we will not be able to meet our rising recurrent needs, in particular healthcare spending," Mr Heng said in his 2021 Budget speech.

The GST was last raised more than a decade ago, in 2007, to 7 per cent from 5 per cent. It was first introduced in 1994 at 3 per cent, then raised to 4 per cent in 2003 and 5 per cent in 2004.