SINGAPORE (Reuters) - Singapore on Monday announced it plans to raise its sale tax to 9 percent from 7 percent, but said the change will be only be made "sometime" between 2021 and 2015.
Finance Minister Heng Swee Keat told parliament of the plans to raise the Goods and Services Tax (GST), which has been at 7 percent since 2007.
"The exact timing will depend on the state of the economy, how much our expenditures grow, and how buoyant our existing taxes are. But I expect that we will need to do so earlier rather than later in the period," Heng said.
"This GST increase is necessary because even after exploring various options to manage our future expenditures through prudent spending, saving and borrowing for infrastructure, there is still a gap."
A hike in GST was widely expected as Singapore has to increase social spending to meet the needs of its rapidly ageing population.
Heng added that increasing the GST by two percentage points will provide the government revenue of almost 0.7 percent of GDP per year.
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Singapore introduced its GST in 1994, with a 3 percent rate. This was raised to 4 percent in 2003 and 5 percent in 2004.
(Reporting by Singapore bureau; Editing by Richard Borsuk)