Monday, July 2, 2012

Goods and Services Tax Vouchers

Goods and Services Tax (GST) is a regressive tax as it that takes a higher percentage of low incomes than high ones. Regressivity is considered undesirable because poorer people pay a greater percentage of their income in tax than wealthier people. The men in white have tried to tell you different. George Yeo, for instance, could, and did, tell you with a poker face, "GST is not regressive".

When the Hougang MP called for a cut in the GST from 7% to 5% in March 2011 to help people cope with inflation, Christopher de Souza (Holland-Bukit Timah GRC) deflected the sting with the qualifier, "High income earners, we know, consume more and therefore pay higher GST." He was arguing that what affects poverty and fairness is not the impact of any particular tax, but the impact of the tax system as a whole.

Even Thaman Shanmugaratnam, then the Second Finance Minister, had admitted that the GST “on its own is a regressive tax as it takes up a bigger portion of a lower-income person’s wages compared to that of a high income earner ”, but “GST plus other schemes will not be regressive”. The only problem with this caveat is that the GST is permanent, while the “other schemes” are temporary and have a finite lifespan.

That could explain the introduction of the new "permanent" GST Voucher (GSTV) Scheme in Budget 2012, a move that is supposedly intended to "help them (lower income families) to bear daily and medical cost, quite apart from topping up their income through workfare and improving the subsidies".

2.1 million adults are supposed to receive $440 million budgetted for the GSTV Scheme, in cash or CPF top ups. Up to $340 million in GSTV-Cash will be paid to elligible Singaporeans on Aug 1, each recipient will be getting $250 in GST-Cash. Another $100 million in GST-Medisave be used to top up by $450 the CPF accounts of elderly Singaporeans aged 65 and above living in HDB flats or private properties of Annual Value (AV) not exceeding $20,000. Those retired elderly with no fixed income staying at such residences will be getting zilch. Nada. Big fat zero. To receive financial relief from the regressive GST, they will have to downgrade from their comfortable abode to a hovel.

Typical of all government handouts, not all the monies budgetted will be distributed. Only those who have signed up by July 18 will be receiving notification in the mail, others have up to December 31 to sign up for their 2012 GSTV payout. The elderly folks who are illiterate, or have diminished mental faculties due to aging or other reasons, are bound to miss the boat.

But $1 billion was definitely spent on the Gardens by the Bay. Mah Bow Tan, the guy who blew $400,000 to rename Marina Bay to Marina Bay, must have made sure of that. After all, it's not like he was spending his own money. You can also bet GST will be levied on the admission charges to the Cooled Conservatory and Skyway. Those who can't afford to be included in the air-conditioned climes will have to watch in envy at the Outdoor Gardens, sweating their guts out in the heat and humidity. This has to be one of the many exceptions to the "inclusive society" illusion.


  1. GST is regressive to the people, but it is good for the government, the most efficient way to collect taxes, very little chances of tax evasion because as long as you're alive, you will consume and this means you can't escape, even the coffin you sleep on is also taxed. For income taxes, people can under-declare, the tax authorities have to incur costs to track down on tax evasions. This is the main reason that governments everywhere love GST. For Singapore, how can the government pass this good opportunity to squeeze more money out of the population by way of GST?

    GST will remain a thorn in our flesh!

    1. Please stop your tolling

  2. PM Lee's "inclusive society" is as good as PM Goh's "swiss standard of living". As it turned out, only a privileged group of people attained swiss standard of living whilst the underprivileged group has to make do with an "inclusive society" where they are "included" in paying GST.


      Your inclusive swiss quality of life is currently sell ranked #15. You can wait long long as it will never get there without a more vibrant civic rights. The article ask "where exactly are you heading to Singapore" exactly what Singaporeans are asking.

  3. A Canadian University study found that, for those earning less than $10,000, the GST and other consumption taxes took 14.6% of their income. In sharp contrast, those earning C$100,000 to C$150,000 had only 7% of their incomes eaten up by these taxes.

    This is the kind of math and truth you want your state media, journalists and policy makers to debate, but they won't. Needless to say, such GST rebate falls far short of cushioning the harsh impact on the poor, and the rebates will be even smaller each year due to inflation. (Are the rates even indexed to inflation?).

    And then read an australian piece on the high price for growth.

  4. "But we all know that building an inclusive society is not just about government edistributing resources to help the poor. It is about building a society where at its heart, people retain a deep sense of responsibility for their families and seek every opportunity to improve themselves and do better. Where employers treat workers with respect, value their contributions and reward them fairly. Where the more successful step forward to help others in the community, because they feel for their fellow citizens. And where Singaporeans actively participate in causes that will make this a better society. An inclusive society will only blossom if we grow this spirit of responsibility and community."

    For retirees, the above quote "seek every opportunity to improve themselves and do better" exclude you and your children from the "inclusive society" unless your children "retain a deep sense of responsibility for their families" and can afford your upkeep. They are only in the process of building an "inclusive society" that may not include you. Growing the GDP by importing more FTs is part of their bid to build an "inclusive society". Their abolishing estate duty may be for the rich to be more successful to "step forward to help others in the community, because they feel for their fellow citizens." Their catch phrases and slogans can have very different meanings from what you normally understand. Beware of smoke and mirrors, sleight of hand and magical illusions performed by pastors and politicians.


    1. EDIT
      Growing the GDP by importing more FTs to depress wages is part of their bid to build an "inclusive society", "where employers treat workers with respect, value their contributions and reward them fairly". And employers are helping to build an "inclusive society" by asking for more foreign workers, when one third of the workforce are FTs?


  5. "Inclusive growth"
    Is this;
    our new national pledge,
    an aspiration,
    or an ideology.

    We all know what happened to our old National Pledge.

    All dictionaries define a pledge as a solemn promise. e.g.

    It's not an aspiration or an ideology.
    So who is confusing the truth?
    The dictionaries or the millionaire?

  6. have not finish reading the whole passage but could not resist after the 1st para.
    boy george is the lousiest politician i've come across.
    he is a useless good for nothing.
    he walked around with a proud face and the moment he started talking down to the people haughtily, his fate was sealed.
    coming to think of it, i think there's a verse in the bible that suits him perfectly.
    proverbs 16:18
    "pride goeth before destruction, and an haughty spirit before a fall"
    boy george needs to reflect deeply on it.
    hope that being kicked out from office can do him some good and in turn make restitution by serving the very same people he turned away in other ways.

  7. I rather they don't kind of 'rob and steal' from us in the first place and then give back in the form of 'peanuts' (not those Mrs Goh ones) and then act as if they are the best govt that any citizen can hope for.

    For example why don't they return us our real entitlements for investing our hard earned CPF savings on our behalf rather then pocketting the difference of an annualised 17% return by paying us a miserable 2.5%~4% interest for our CPF savings.

    Or simply charge us the real cost price for any new HDB flat minus the 'God-knows-what' profit & markup they have built in the prices without any need later to give us any of those 'artificial' grants that they often say will not be possible without the generosity of our PAP govt, not unlike those generous storewide discounts offered by Dept Stores after a hefty mark-up in prices.

    And talking about the new park, what is so grand about building another tourist attraction with all the commercial trappings of the tourist dollar like charging expensive entrance fees & high market rents for most of its venue for souvenir shops, restaurants, food courts, etc ?

  8. 1. If they are taking money from you on the one hand and returning money to you in the form of CPF on the other hand, they are basically micro managing, or dictating, your finance/spending.

    2. By giving money to the poor, the poor may be beholden to the ruling party during the election time.