Singapore’s Leader Acknowledges Public Concerns as Inflation Eases Following Tax Adjustment

The recent increase in Goods and Services Tax (GST) did not cause a significant surge in inflation, Prime Minister Lawrence Wong stated, emphasising that price growth slowed after the tax hike in 2023 and 2024.

During the Budget debate, Leader of the Opposition Pritam Singh questioned the decision to proceed with the GST rise, suggesting it had intensified inflationary pressures. However, PM Wong attributed inflation mainly to external factors such as global conflicts, supply chain disruptions, and energy costs, all of which have stabilised over time.

Singapore’s central bank assessed that the GST increase had only a “transitory” effect on inflation, he added. The tax rate, raised in two phases from 7 per cent to 9 per cent, coincided with inflation peaking at 6.1 per cent in 2022 before dropping to 4.8 per cent in 2023 and 2.4 per cent in 2024.

“Where is this so-called turbocharging?” PM Wong remarked, urging for a fact-based discussion rather than exaggerated claims, particularly with elections approaching.

While acknowledging that Singaporeans still feel cost pressures, he noted that similar concerns exist in other developed nations despite positive economic indicators. The Government remains committed to providing temporary assistance, such as additional CDC vouchers and support through the SG60 package.

PM Wong also addressed criticism from opposition MPs who argued that the Government relies too heavily on vouchers for cost-of-living relief. He clarified that these are short-term measures, with long-term efforts focused on structural policies like skills development, job training, and education investments.

A significant portion of the national budget is allocated to social development, surpassing spending on economic and security sectors. The Government is prepared to increase social expenditure where necessary but remains focused on ensuring fiscal sustainability.

As part of its broader commitment, key social initiatives such as the Central Provident Fund (CPF), Workfare for lower-income workers, and Silver Support for seniors have been continuously enhanced. Additionally, the Government is reviewing policies to strengthen support for caregivers, individuals with disabilities, and family leave arrangements.

PM Wong reiterated that all policy proposals are carefully evaluated, with public feedback playing a crucial role in decision-making. “We may not adopt every suggestion, but we will always explain our reasoning,” he assured.