GST: Even economists tot GST could go up

I quoted a senior lawyer

If the G thinks the earlier remarks were clear and categorical, so that citizens could have no doubts, how does it explain why so many reputable economists were willing to entertain thoughts of an increase this decade?

PAP voter cheers on Auntie, says Fu talking cock 

A pal of mine posted on the FB post where this quote originally appeared

The economists even factored in an increase in their analysis of GDP growth. Btw, I’m one who tot that GST would not go up this yr because it would contradict what Tharman said in 2015 and because it would make no sense effectively “locking up” the increase for 2018- 2020 because there’ll be a new govt by 2021.

The retired GIC Chief Economist waded in

…my respected economist friends were similarly unsure if GST would be raised this time after attending pre budget MOF briefings, even with Minister Heng.

Here’s what the constructive, nation-building rag of MediaCorp had to say about the economists changing their forecasts after the Budget speech

The Budget’s one-off cash handouts and delay in the goods and services tax (GST) hike, which will kick in sometime between 2021 and 2025, prompted Credit Suisse to raise its 2018 economic growth forecast for Singapore from 3 per cent to 3.3 per cent.

Taken together, these would boost growth domestic product (GDP) as well as private consumption, the bank said in a research note, as it raised its private consumption growth forecast to 3.6 per cent, up from 2.9 per cent.

Credit Suisse economist Michael Wan said the bank had previously factored in a 2-percentage point GST hike for its macro forecasts. “We, together with most other economists, were forecasting GST rates to rise this year,” wrote

Mr Wan, who described Monday’s announcement on the delayed GST increase as among the “surprises” of Budget 2018.

Other economists who had expected a GST hike to be implemented either this year or next agreed that the delay would bring a “minor boost” to consumption spending. Nevertheless, they left their GDP forecasts unchanged.

…

Commenting on the Credit Suisse report, Mr Bernard Aw, principal economist at IHS Markit, said consumers are expected to bring forward “large purchases” ahead of the GST hike.

UOB economist Francis Tan said he is keeping to his earlier forecast of 2.8 per cent GDP growth this year, which was based on a 1 percentage point GST hike this year. Nevertheless, he acknowledged that the delay of the GST hike “provides some upside”. He added: “Whenever there is a higher tax, people reduce their purchases.”

Maybank Kim Eng economist Chua Hak Bin is also maintaining his 2018 GDP forecast at 2.8 per cent, as he had expected the GST hike to be implemented next year. Private consumption is expected to improve from last year but it is unlikely to exceed 3 per cent this year, he said. “The jobs market looks to be improving and that will support consumer spending,” he added.

Both Mr Tan and Mr Chua, however, did not think that the impact of the hongbao handouts would be significant enough to lift GDP growth. Some Singaporeans may choose to save the money instead of spending it, Mr Tan noted. “In that aspect, these are not material handouts,” he said.

The reason I quoted so extensively is to show that “after attending pre budget MOF briefings, even with Minister Heng” the economists felt it necessary to factor in a GST rise in their forecasts.

 

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