I quote from Today Online – ‘the Government will have to significantly increase its healthcare and social assistance spending over the next few years. This could be financed by raising the Goods and Services Tax (GST) from the current 5 per cent to 7 per cent. In 2004-05 alone, GST yielded $3.5 billion under the existing rate’. Take from the rich, give to the poor? Is this the Singapore government’s re-enactment of Robin Hood’s tale or yet another successful scheme to fill up its coffers? I remember not too long ago that I blogged about the need to relook at our welfare benefits for the needy, and there was a comment that the way to do that would be to increase taxes. Strangely, that scenario seems about to be played out for real this time.
The sad fact is again, the most hard-hit group affected by all these will be the average person like you and me, not the rich. The government made a comparison to the welfare systems in Europe – ‘Singapore, on the other hand, will try to make sure that if you are willing to work, there will be jobs for you. In addition, it will now consciously tilt its schemes in favour of the vulnerable sections’. Yes, in other words, implicitly it means you will be working your whole life away just to keep yourself alive. Just take a step back and reflect on this, GST was introduced not too long ago (really). It has increased from 3%, to 5% and now (less than 3 years?) it will reach 7%. Inflation rate has consistently gone up markedly over the years, yet bank interest rates have dropped significantly in the past. Now looking at the situation, even those fund investments that promise a return of 10% will not be able to ensure a safe retirement plan.
Then you sit down and think about it again. Wasn’t it just recently that more gantries were introduced along the various expressways, and people are charged for trying to go home from work to their families? Wasn’t public transport fees increased as well? I can’t help but wonder with ironic amusement, that the government is trying to get Singaporeans to have more children. 7% GST applies to medical fees, food, education and almost every aspect of our lives, no? Now why will I, in the middle-income group, have even more incentive to have children? So that my future generation born in the middle-income family, can contribute to the society by being taxed, say 20% when their time comes? How can I not look to the future and see only bleakness?
November 21st, 2006 at 10:36 am
To be honest, I am rather unhappy when government raised the GST to 7%. It does hit me. Imagine, my credit card bills (family) running at 4k average monthly and an increased in 2% means an increased of 1k per year. Seems like not long ago we talk about Singapore not doing enough for the needy and somehow tax has to go up to cover that.
Govenment’s choice of using GST as an instrument to collect more tax is interesting. They could have chosen income tax for instance. GST is for traders. With exemption on financial instruments and others, every goods and services have to pay GST. The reach is not only the work force and citizens, but also the business entities, tourists, etc.
On a side note, I am not against putting ERP gantry along CTE in the evening to ease the traffice so that by paying S$0.5 or S$1, I can reach home faster. I really not against it … if it works. I travel from CBD to YCK in the evening. After the ERP gantry has erected, there is always a huge jam from CBD to exit to PIE (because beyond that you will need to pay). Then from exit to PIE to Bradell, that mere 1 or 2 km, there is no traffic. And we can enjoy like 30 seconds of smooth traffic. And all the traffics start to pour into the CTE after the ERP gantry choking up the entire highway. In effect, my travelling time is still the same, 40 minutes.
I really don’t mind paying S$1 if it solves my problem. But it doesn’t.
November 23rd, 2006 at 12:26 pm
Ah you see… that’s the “beauty” of being the government. Income tax hits them personally, because they earn hell of a lot too much. GST increase doesn’t. I received an email where someone did a some calculations of the impact of the increase in GST, with some base assumptions of course. I must say the results were rather interesting. I might post it on my blog.
That’s not the end of it actually, I smell a hint of the future where the target of the government is 10% GST.
And that’s the thing about the government policies. There’s a bad trend to it all. (1) They announce it and implement it without apparently doing much thinking about it and getting feedback. (2) They position the policies to solve certain problems, but in fact the problems are not solved. (3) Most of the policies usually just make more money for them, and nothing else. The money doesn’t translate to anything useful for the citizens. Do people really need lift upgrades? Pffffttt… These days, I pay more for SMRT fares and yet sometimes I can’t even squeeze myself into the bloody LRT. And I’m skinny as hell, so that says a lot.
November 23rd, 2006 at 3:36 pm
I suddenly have this funny sensing that the bonus payout to the civil servants is to cushion the increased in GST in some sense.
Conspiracy theory!
Well, I am sort of thankful that it is GST that is increased and not income tax.
November 24th, 2006 at 11:13 am
Well the other thing is of course, with income tax, they won’t reap the rewards of the increase until people pay up income taxes. For GST it’s instant rewards and gratification for them. Just implement and watch the billions roll in…
November 24th, 2006 at 10:33 pm
i used to be pretty good in economics … and i even spent 1 term in campus doing development econs.
i know this is a bore, but from an economist’s point of view, GST has its functions. I don’t like it …. but still , a pretty good read from an academic point of view
http://perspectiveunlimited.bl.....o-pay.html
..
November 27th, 2006 at 4:11 pm
Hehe… just like what you say, it reads like an academic paper. But unless the government really does what they set out to do – which is supposedly to compensate the poor and provide more aid to the needy, I do not believe it is the best thing to do. The rich is still unaffected, while the middle class is hurt the most. I see the poor hurting in the long term too, unless the government packages are going to be implemented for the long term and not just a one-time compensation.
December 4th, 2006 at 2:03 pm
The government has done something really smart. Today’s newspaper it said that the billion of dollars collected via this 2% increase will also benefit the middle class SINGAPOREANS and singaporeans only. Now, before today, I have second thought voting for PAP again in the next election. But right now, I want to see what they really mean by that.
So, they are now using this increase in GST to reward the Singapore Citizens – something that has been lacking for years as the difference between Citizenship and PR is not a lot.