The government of Singapore is strengthening its finances in anticipation of a projected spike in social spending in the years to come. Residents are preparing for a sales tax increase that will take place in the new year.

Monday will mark the second round of a two-phase rate hike, with a one percentage point increase to 9% on the services and goods tax, which is imposed on everything from groceries to diamond rings. The sales tax was increased to 8% this year from 7% after remaining constant for fifteen years.

Opposition legislators have called for a delay in the increase due to the hikes occurring on top of already rising living costs. Core inflation for the country peaked at 5.5% in January and February and moderated to 3.2% in November, but remains stubborn, with the central bank projecting it to average 2.5–3.5% in 2024.

In light of Singapore's aging population and escalating healthcare expenses, the government has stated that the tax increase was required to support state coffers. Twenty-five percent of people will be 65 years of age or older by 2030, according to estimates.

Lawrence Wong, the deputy prime minister, stated in a parliamentary reply in August that postponing the GST rise will only cause more issues down the road and reduce the ability to meet their expanding fiscal needs.

In an "assurance package" worthy of over S$10 billion ($7.55 billion), the government has provided households with financial relief. This month, all adult Singaporeans will receive payments ranging from S$200 to S$800.

A number of retailers have promised not to pass along the tax increases at this point. IKEA, a home furnishings company, stated it would absorb the 1% increase but did not specify when the program would end. FairPrice Group, a supermarket chain, said it would absorb the increase on 500 necessities, such as rice and vegetables.