Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam has rejected calls by the Workers Party to increase spending on healthcare to 6.1 percent of GDP, as in the OECD, saying the government will have to raise GST to 20 percent to meet the increased expenditure in healthcare.
Wrapping up on the Budget debate in parliament yesterday, Mr Tharman emphasized that the spending on healthcare has to be sustainable and not a burden to future generations.
“If we have to take our healthcare spending to six percent of GDP which is the wonderful average of OECD countries, what does it mean in terms of taxes? If it is GST, it has to rise to 20 percent. If it is corporate income taxes, it will have to rise to ‘ above 40 percent. If it is personal income taxes it will have to rise across the board with the top line rate moving to 60%, very high,” he opined.
Instead, Mr Tharman said, the focus should be on outcomes.
By 2016, healthcare spending would go up to 2 percent of GDP and by 2030 around 3.5 percent of GDP.
DPM Tharman: GST will increase to 20 percent if healthcare expenditure is raised to 6 percent of GDP