Exempting or introducing reduced GST rates on certain items, such as rice and eggs, from GST, will benefit the better-off more as they spend more.
The experience of many countries and relevant studies also show that a multi-rate GST system distorts consumption and production, and raises businesses' compliance and administrative costs significantly, which are then passed on to consumers who eventually pay higher prices.
The GST should not be seen on its own. Under Singapore’s approach, GST works hand-in-hand with the permanent GST Voucher scheme and other social schemes. From education to healthcare to housing, our social programmes provide a higher level of support for lower- and middle-income households. For example, they benefit from higher healthcare and pre-school subsidies. There are also schemes like Workfare and Silver Support to help lower-income households.
We will continue to ensure that this overall system of taxes and transfers is fair and progressive, i.e. those who are better-off are taxed more than what they receive in transfers, while lower- and middle-income households receive more in transfers than what they pay in taxes. The GST Voucher is given directly to those in need, lowering their net GST payable.