Singaporeans' BFF just saved them a tax increase: Bloomberg Gadfly

SINGAPORE (Feb 21): Singaporeans have dodged the bullet of higher consumption taxes, at least for the next three years. They should thank their new BFF -- the bond market.

Finance Minister Heng Swee Keat left the goods and services tax, last raised to 7% in 2007, unchanged on Monday. Most commentators, including yours truly, had expected an increase after Prime Minister Lee Hsien Loong spoke last November of higher levies as ''not a matter of whether, but when.''

Instead, Heng said the GST would go up by 2 percentage points between 2021 and 2025; probably in the earlier part of that four-year window. Within a decade, the graying city-state may have to lift spending on healthcare to 3% of GDP from 2.2% now. Raising the GST will take care of most of that extra hit, buttressing Singapore’s triple-A sovereign rating.

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