Singapore to bring in carbon tax from 2019

Randolph Lopez
February 21, 2018

He said this "reflects the government's long-standing commitment to share of the fruits of Singapore's development with Singaporeans", according to Channel News Asia.

Singapore Finance Minister Heng Swee Keat announced a range of tax increases in his budget, including a surprise hike in property levies, as he seeks to shore up savings to cope with a rapidly aging population.

"The exact timing will depend on the state of the economy, how much our expenditures grow, and how buoyant our existing taxes are", Heng said.

He said the government needed the GST increase, as there was still a gap even after it had explored various options to manage its future expenditures, such as via prudent spending, saving and borrowing for infrastructure.

He highlighted that the increase was made to build a fiscally sustainable and secure future for the country, helping fund expenditure in areas like healthcare, security and other social spending, while adding that the increases in these areas will be recurrent, broadly benefitting Singaporeans and its current generations.

The hike in GST is set to boost revenue by nearly 0.7 percent of GDP a year.

While Singapore's economy grew at a better-than-projected 3.6 per cent previous year, up from 2.4 per cent in 2016, Mr Heng noted that rising wage costs remain a key concern for businesses.

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Presently, the GST is applied on imported services provided by an overseas supplier that has an establishment in Singapore, but not if the provider is not established here.

During his budget speech in Parliament, the city-state's Finance Minister described the bonus as a 'hongbao', the Mandarin word for a monetary gift given on special occasions.

The tax rate will start in 2019 at S$5 (US$3.79) a tonne, before then ramping up after 2023 with the aim of hitting S$10-s$15 (US$7.50-$11.37) by 2030.

For FY2017, the government expects an overall budget surplus of S$9.6 billion, or 2.1 per cent, of GDP.

The bonus, which will cost the Government $700 million, comes from this year's Budget surplus of $9.6 billion.

Singapore last raised its GST in 2007 when the rate was hiked to 7% from 5%. For households, the impact of the carbon tax will be small, at about 1 per cent of total electricity and gas expenses on average.

B2C imported services will come under an overseas vendor registration model, which will require e-tax to be paid by overseas vendors whose annual global turnover exceeds $1 million and who make more than $100,000 in the sale of digital services to consumers in Singapore.

Other reports by GlobalViralNews

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