Singapore will begin raising its goods and services tax next year, according to Finance Minister Lawrence Wong, who also unveiled a raft of tax measures targeting at higher-income people in his budget statement on Friday.

The GST rate will increase to 8% in January of next year, and to 9% in 2024. It has now reached 7%.

The administration also intends to raise the highest marginal personal income tax rates for wealthy earners, raise residential property taxes, and levy higher levies on luxury vehicles.

The moves come as Singapore emerges from a pandemic-inducted economic slump, but walks a tight rope in maintaining its attractiveness as a global financial hub while guarding against rising wealth inequality and rising costs of living.

Wong said the government will spend a total of about S$9 billion ($6.70 billion) over the next five years on measures to help its low-wage workers.

Wong said the government was closely monitoring the risk of rising inflation, which has been driven by a recovery in global demand, continuing supply chain disruptions, and especially by rising energy prices.

He announced a S$500 million ($372 million) package to support jobs and businesses as part of his budget proposals and proposed to set aside S$560 million to help Singaporeans deal with the rising cost of living.

Singapore’s government has committed close to S$100 billion over the past two years to cushion its people, businesses and the economy from the impact of the COVID-19 pandemic.

The economy, which is highly reliant on global trade, is expected to continue on its recovery path, with its gross domestic product forecast to expand 3-5% this year.

The Monetary Authority of Singapore tightened its policy settings in January in its first out-of-cycle move in seven years as the economic recovery gained traction and price rose. It is widely expected to tighten again at its scheduled policy meeting in April.

The city-state’s 2022 core inflation is forecast at 2-3% and headline inflation at 2.5–3.5%.