15 Nov 2006

Say NO! to GST Hike

SINGAPORE: The Goods and Services Tax will be increased to 7 percent, up from 5 percent presently.

This was announced by Prime Minister Lee Hsien Loong in Parliament on Monday but when exactly will be decided later.

Speaking in Malay, Mandarin and English, Mr Lee explained that the hike is necessary to finance the enhanced social safety nets, needed to help the lower income group, and he emphasised that the offset package will more than counter the rise in GST.

While Singapore's current model to tackle the widening income gap is sound, Mr Lee said the government will take on 2 approaches to deal with the new environment - to strengthen the safety nets and tilt the balance in favour of the lower-income groups who do not benefit from the fruits of economic growth.

To do this, government spending will have to go up. The government now spends some 15 percent of its GDP - one of the lowest in the world.

"This is inevitable over the next 5 to 10 years - infrastructure investments will cost money - R&D is to cost $5b over the next 5 years; as medical technology improves, people age and more will go to hospital to get more treatment so spending is bound to go up. As we tilt the playing field across the board, the lower income will be getting another boost not just once in awhile. Therefore its better to start building resources now so that when we spend more," said Mr Lee.

To finance this, indirect taxes or the Goods & Services Tax will have to go up.

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Anonymous said...

2% increase is healthy, eventually a comprehensive taxing machinery like GST should have a rate between 10% - 15%.

antipathy said...

why? GST is a regressive tax. When the French came up with it in the early 20th cent. , it was only because it makes tax evasion difficult. Now the europeans (which have an imposed 18% VAT, due to EU regulations and politicking.) want to work towards rescinding it, because what it leads too is a widening social gap, meaning that welfare must come into the picture.

Notice how Singapore Gvt points to those countries that have VAT and not to those that don't.

Anonymous said...

brudder, most of those western countries with a rate between 10-15% have pretty comprehensive welfare systems lah. their welfare not wayang wayang one ok. no humiliation one ok.

antipathy said...

dear anonymous 12:52,

Let us not use the term "western countries". We are only referring to European countries. Western countries are countries in the Western Hemisphere. (which means the americas) U.S. doesn't have a VAT (excluding a single state, which uses SBT, and they are phasing it out by 2009).

But we aren't talking about europe here, we are talking here. Singapore doesn't wish to move to a "welfare scheme", and you should know that. Thus if they don't want to, they also can't apply a GST like Europe.

The logic of increasing GST to "help the poor" is astounding, cause 1. It hurts the poor. 2. It harms consumption. 3. Unless the PAP is lying to us, our reserves is quite healthy, and there is no need to raise tax.

Anonymous said...

Actually I think its clear what the people (citizens of SG) wants to see. An increase in tax may be inevitable but the end benefit proposed must be tangible.

Announcing such broad taxation measures without a well placed countermeasure for the poor is plain bullying.

Notice that 'welfare' is still a dirty word to the ruling party.

Anonymous said...

Increasing in taxation on the population without an corresponding
increase in welfare spending for the people is wrong. A 2% increase in GST is estimated to bring in additional $1.5 bil for the govt.
Do we seriously believe the govt is
going to increase even half this amount in welfare spending for the people?

Anonymous said...

Well, 66.6% how is it so far? Great isn't it? Nothing like a good dose of belt tightening lifestyle. Just like good old times....the good old post election times. Each and every one of them!!

Now don't you want to rush out in the street to sing (scream) ...thanks for the memories!