Singapore's GST hike and how are students affected?

What is happening?

Singapore's GST is set to increase to 8% by 2023 and 9% by 2024. Although it may seem like a small increment, the effects are large. However, we students often do not consider the impacts. While a bubble tea may simply cost a few more cents, big ticket items can cost hundreds more. Even so, an increment of a few cents can potentially add up to tens of dollars or even up to a hundred per annum. Which is why the public has so much negative sentiments towards it and why the government has rolled out an assurance package for payouts. Minister Lawrence Wong has also mentioned that the payouts will cover at least 5 years of additional GST expenses.

You may then wonder why is the government increasing GST?

It is because it serves as a form of revenue for public spending. These spendings include education, healthcare and security, and with greater spendings, there would be greater quantity and quality. Furthermore, Singapore's tax is graduated, meaning it is higher for the wealthier. This means most of the tax income comes from the wealthy. Reports have shown that the wealthiest 10 per cent contribute up to 80 per cent of the tax income. However, the wealthy often have vehicles of tax avoidance, which makes taxing less effective and thus another possible reason why GST is increasing as well. Furthermore, some business owners may under-declare their income as well, resulting in less taxes paid.

How exactly are students affected?

GST affects everyone, and although big ticket items are the least of concerns to students, we have other expenses to worry. Although we do not feel the sting of a few cents, the sum of all this incremental GST can be felt in the long run when accumulated. Especially so for our daily necessities such as transport and food. As a student myself, a $500 per month minimum would be required for my daily necessities. Furthermore, only those who are aged 21 and above would be eligible for the government payout. On the other hand, for foreign students especially, school fees which are inclusive of GST, will rise by a large margin. Therefore, start planning your finances early and be more prudent and frugal!