GST Vouchers' Offset of GST Paid by Lower-income Households

6 Mr Chua Kheng Wee Louis asked the Deputy Prime Minister and Minister for Finance (a) over the last three years, what average percentage of GST paid by the lowest 20% of households (by income) is offset by all forms of GST vouchers; and (b) what is the breakdown based on one-off versus permanent GST voucher schemes.

The Second Minister for Finance (Mr Lawrence Wong) (for the Deputy Prime Minister and Minister for Finance): Mr Speaker, Singapore operates a comprehensive and progressive system of taxes and transfers to support our citizens in meeting their needs, including housing, education, healthcare, public transport and a safe and secure environment.

The GST Voucher (GSTV) is one permanent scheme that provides support to lower and middle income households and seniors for their living expenses. It comprises an annual cash payout, annual MediSave top-up for those aged 65 and above and quarterly utilities rebates (U-Save) for Housing and Development Board (HDB) households.

In some years, there were additional one-off GSTV special payments. This was the case in the past three years. In 2019, a GSTV – Cash special payment was given to celebrate Singapore's bicentennial and to support Singaporeans who need more help. An additional $20 of U-Save rebate was also provided each year from 2019 to 2021 to mitigate the impact of the introduction of the carbon tax. In 2020, additional U-Save rebates were given to all eligible HDB households to help Singaporeans cope during the extraordinary uncertainty brought about suddenly by COVID-19.

From 2018 to 2020, the permanent GSTV scheme offsets an average of 84% of the annual GST payable by the bottom 20% of Singaporean households, on a per household member basis. So, that is for the permanent scheme.

The GSTV special payments in 2019 and 2020 were equivalent to an offset of 33% of the GST payable by the bottom 20% of Singaporean households, again, on a per household member basis. This is on top of the 84% offset under the permanent scheme. In other words, in this extraordinary year, households in the bottom 20% got more from both the permanent and one-off GST Vouchers than the amount of GST payable.

An enhanced GSTV scheme will continue to be part of the progressive system of taxes and transfers that we have in Singapore, ensuring that lower income households receive more benefits than the taxes that they pay.

Mr Chua Kheng Wee Louis (Sengkang): I thank the Minister for the answers. Especially in light of COVID-19, I think there is a lot of concern as to inequality, especially if you look at the household income from work, I think it is the lowest 10% that saw the hardest hit in terms of income. So, in terms of the supplementary questions, I have got two.

The first is in relation to the enhanced permanent GST Voucher scheme, in terms of the target amount of offset for the households involved, what is the target in terms of how much of the GST that would have been payable and how much of it do you want to offset? And what is the percentage of Singaporeans that will come under this GST Voucher scheme?

The second is also in relation to that. If I look at the cut-off right now, in terms of the assessible income criterion, that is about $28,000, which works out to about $2,300 a month, which is significantly lower than the median monthly income from work of about $4,500. So, I just want to understand, in terms of the scope of this permanent GST Voucher scheme, the amount of help that could be rendered to the middle income households.

Mr Lawrence Wong: Mr Speaker, I thank the Member for his questions. Inequality is certainly an issue that the Government is very focused on. We have been tackling this issue through a whole range of measures – Workfare, GST Vouchers, Senior Employment Credit, a whole range of different social support measures – for at least 20 years now. And you can see from the statistics that, in fact, the Gini coefficient in Singapore, post-tax and transfers, has been coming down. So, our measures are working. We will continue to do more to address inequality and social mobility, particularly, given that the concerns of COVID-19 and the impact of the pandemic are being felt disproportionately more by the lower income groups.

As to the enhancements to the permanent GST Voucher, that is something we are studying. We have committed; the Deputy Prime Minister did say when we talked about raising the GST rate, that we will also look at enhancing the permanent GST Voucher, not just providing a one-off offset but enhancing the permanent layer of the GST Voucher. We are studying that and will certainly get back with details when we are ready.