Singapore residents see bigger impact from GST than expat curbs

By Low De Wei

(Bloomberg) —Most of Singapore’s residents see an upcoming consumption tax hike as having a large impact compared to new measures to curb foreign workers, according to a new poll, as the government looks to rebuild its coffers and secure local jobs after two years of the pandemic.

An online survey conducted by Milieu Insight showed 85% of 1,000 respondents think an upcoming increase in the goods and services tax will have a large impact on them and 40% see a similar impact from a rise in property tax rates.

Just one in ten see measures like the tightening of minimum salary requirements for white-collar foreign workers and progressive pay increases for lower-wage employees affecting them greatly. Milieu’s poll, which was carried out on the day of the budget on Feb. 18 until Feb. 21, has a margin of error of 3% at a 95% confidence level.

The poll signals local dissatisfaction about overseas labor has take a back seat as total overseas manpower across all classes — from low-wage construction workers to high-earning expats — has not returned to pre-pandemic levels. The government is now under pressure to act as labor shortages cause construction delays and pose an inflationary risk.

More broadly, the survey is an early indication of the challenge officials face in seeking to sell the most aggressive tax rises in years to Singaporeans, as the government tries to rebuild finances after an unexpected third straight year of deficits.

Finance Minister Lawrence Wong said he decided to stagger the increases in GST over 2023 and 2024 to address the significant concern about rates going up “at a time of rising prices.”

“We’ve spent a lot of money in the last two years throughout the pandemic, so the revenue needs are indeed very pressing,” Wong told CNBC in an interview on Monday. Based on that, the government had been pressed to raise the consumption tax in one shot from 7% to 9% and sooner this year, he added.

Opposition to a staggered GST hike remains high despite a public relations blitz by the government to justify the rise due to rising health care costs. Only 23% of those polled agreed it’s an appropriate time to raise the tax.

Just under half of respondents think the hike should come “after the pandemic” while 28% think the increase should never be introduced in the near future. The poll showed 52% of the respondents were not willing to pay a higher rate even if that means more support for lower-income groups and the health care sector.

Rising inflation also dominates public concerns with 63% of the poll respondents indicating that they do not feel more reassured about managing costs of living after the budget. The government had extended GST rebates to more households and announced additional cash payouts and grocery vouchers for Singaporeans.

Price rises are expected to accelerate further. Economists surveyed by Bloomberg expect headline CPI due Wednesday to rise for the fifth consecutive month to 4.2% in January, the highest since 2013.

© 2022 Bloomberg L.P.