As part of the changes, Singapore has unveiled a two-percentage-point increase in its goods-and-services-tax rate to nine per cent, effective sometime between 2021 and 2025. This will allow the economy and population plenty of time to adjust.
Overall the Singaporean economy is continuing to perform well and ANZ expects the country to record growth of about 4 per cent this year. This should continue to provide the country’s coffers with increased revenue.
The budget forecasts a fall to an overall deficit for financial year 2018, but traditionally the Singaporean government has outperformed its initial estimates. Looking back at the last ten budgets the government has tended to announce much-larger than expected surpluses.
All in all the Singaporean economy and the government is well-positioned to face its looming demographics challenge.
Khoon Goh is Head of Asia Research at ANZ