Imran Ahmed / http://imranwrites.blogspot.com/
It is time for the government to consider lowering the GST rate in light of how it hurts the poor more than the rich.
RECENT reports in the international media suggest that the US tax collector has received an unusually high number of queries from wealthy people about how to ‘come clean’ about their undeclared overseas wealth.
Breaking the law can rarely be condoned and this is not one of those ‘Gandhian civil disobedience’ moments. But the pandemic of Americans hiding money from their government does raise questions about the structural benefits of various tax regimes.
Any crisis always presents opportunities for constructive change.
For Singapore, it might be the correct time to revisit the Goods And Services Tax (GST) rate of 7% and consider reducing it to, say, 5%. The natural economic distortion created by the GST, which is an indirect tax, is decreased and domestic consumption will be given a fillip.
It is intuitive to suggest that an efficient tax regime will not only generate high taxes but also encourage capital to be properly utilised.
Singapore’s income tax system, which is a form of direct taxation, is easy to understand and simple to implement. Importantly, there is no tax on an individual’s foreign earnings until the moneys are repatriated to Singapore.
Practically speaking, a friendly direct tax arrangement makes it easier for wealthy individuals like Jet Li or the financial guru Jim Rogers to relocate to Singapore. It means people do not have to pay taxes on their entire overseas income streams, only on the amount which they bring into and spend in Singapore.
Such stipulations encourage wealth to gravitate to Singapore. When you couple a low tax system with the other benefits of living in Singapore then it is no surprise people will be happy to live (and spend their money) in the city-state.
The inflow of wealthy and economically active individuals benefits all Singaporeans.
Poor most affected by GST
Indirect taxation, as represented by the 7% GST, is another matter. The GST scheme itself is an acceptable tax instrument but at 7%, Singapore’s GST rate is higher than necessary.
GST is a form of regressive taxation. Like all forms of indirect taxation, GST has a greater impact on the less well-off sections of society than on the more affluent.
For example, a five dollars GST paid monthly by a typical cable television subscriber is more valuable to a person with a monthly income of SGD 2,000 versus someone with a monthly income of SGD 15,000.
It is a tax on consumption and, at least in theory, encourages savings and discourages consumption. However, consumption at a basic level is inelastic and comprises of basic necessities. People of lower income level will be unfairly penalised because they have to spend on basic necessities, which is affected by the GST as well. There is only so much one can save by reducing consumption of rice and basic clothing.
Based on official figures, in 2005 approximately 40% of the labour force earned less than SGD 2,000 monthly. This large segment of the population will pay limited, if any, direct taxes but even a slight reduction in the GST will positively impact their consumption and savings dramatically.
Possible to cut GST
During the years 2003 – 2008, Singapore’s population has increased by 18% to 4.8 million (the increase in Singapore’s labour force will typically be much lower than the 18% population increase). In the same period, personal income tax revenue has risen by 53% from SGD 3.9 billion to SGD 5.9 billion. Takings under the corporate income tax head swelled by 43%.
Prima facie, the numbers indicate that current personal and corporate income tax rates are not acting as a drag on economic activity. After all, both personal and corporate income tax revenues have grown considerably faster than the rate of population growth.
This suggests that the reliance on GST revenue can be tempered as proceeds from corporate and personal taxes continue growing as the economy expands.
Since the introduction of GST in 1994, it has become a significant source of revenue for government coffers. In 2008, the GST will provide an estimated SGD 6 billion while personal income tax is expected to come in at SGD 5.9 billion. GST now delivers approximately 17% of total government revenue versus 12% in 2003.
GST is and will remain important to the government’s budgetary process. But Singapore has already accumulated reserves of over SGD 200 billion and generally manages a budget with an operating surplus. In this context, the focus for the taxation regime must be to increase economic efficiency in the employment of capital.
Future taxation revenues should be underpinned by sustainable advances in domestic economic activity.
Ordinary Singaporeans have worked extraordinarily hard to contribute to government coffers for the last 44 years. The current economic crisis might just provide the best opportunity for the Ministry of Finance to evaluate a permanent reduction in the GST rate.
Note: All revenue and population data has been obtained primarily from the Singapore budget websites and / or other official Singapore government sources available on the internet. Links can be provided if requested.
Imran blogs at http://imranwrites.blogspot.com.
they can’t even be bothered to lower their MILLION DOLLARS salaries and you expect them to lower the GST ??
GST affected all sector in the community. I understand compare to Hong Kong it don’t affect all sector only on like entertaiment. In our community here, the real motive is to dig deeeeeeeeeeeeper in our pocket. As I have comment B 4, GST is a replacement of the payroll taxe in the 80′s. which have been argue by opp JBJ. & being taken our quitely, Came back as a form of GST.in 1994. So GST should be taken off from the accumulate revenue, It absurd taxe.
as MICHAEL JACKSON sing his last song before he died
THEY don’t really care… about …..US!!!!
TRUE what he said they as refer to most ( goverment) don’t really care about their citizens their people.
MICHAEL donated alot of money to the children to give them a better life and for their sickness where they need.just like that he throw his money not $10 but millions.
lee kuan yew and PAP have to go and pray to him to forgive their sin. they are more sinful then people thought michael was. SHAME ON LKY AND PAP
voted out PAP is already 80%confirm from all the singaporeans we heard. but yet to see the real vote. maybe %99 will vote pap whole bunch out and change their life for a better place to live or 90% singaporeans can vote PAP and shaft their own singaporeans finger in their own *** and take it down thier throat.
My view is GST will not go down. I can’t see it coming down.
You need to live within yours means, live humbly, then you will be less affected by it. Saving is a virtue, do not overly spend.
[i]You need to live within yours means, live humbly, then you will be less affected by it. Saving is a virtue, do not overly spend.[/i]
indeed wellspoken for a pap diehard supporter
can’t the government do the same? by lowerin the GSt and lowered their salaries as well?
why do they need to earn over $100,000++/month when you/them tell us not to overspent? so what is the ministers spendin on? buyin more landed properties and maintainnin mistresses?
last but not least with our miserable earnins beside payin a heavy expenses here and there, how to save?
Geart Articles, there one additional point. Income Tax are to tax those people that are working and have a monthly income, but GST are taxing not only tax the working people that have income, but also those people that lost their job to FT and PR, Baby to student that are studying, Elderly that are retired and sick that cannot work. So this mean, we start paying to our Government when we are born until we step into the coffin. Poor Singaporean.
56) incikencik on August 29th, 2009 1.50 pm [i]You need to live within yours means, live humbly, then you will be less affected by it. Saving is a virtue, do not overly spend.[/i]
indeed wellspoken for a pap diehard supporter
can’t the government do the same? by lowerin the GSt and lowered their salaries as well?
why do they need to earn over $100,000++/month when you/them tell us not to overspent? so what is the ministers spendin on? buyin more landed properties and maintainnin mistresses?
last but not least with our miserable earnins beside payin a heavy expenses here and there, how to save?
My advice applies to everyone in this world not just Singapore. So don’t link me a pap die-hard, giving writers here names.
Do not over-spent, do not live in borrowed money, spent within your means.
Well, you can do the opposite and see where you will end up. Listen to my advice.
i think G.S.T is Goreng Sampai Tua behasa meaning bluff until u get old
[i]My advice applies to everyone in this world not just Singapore. So don’t link me a pap die-hard, giving writers here names.
Do not over-spent, do not live in borrowed money, spent within your means.[/i]
why didnt you rebuke on lowerin your master salaries or the gst issues
don’t link you as a pap lacky?
fact is, you must be of a certain salary,then you can say it’s a low tax system, again advantage to the well off, GST, well, poor have to pay all groceries with it, that’s a basic for human, why tax on perishable?
61) incikencik on August 29th, 2009 5.01 pm
A die-hard pap supporter will want you to spend so that government tax revenues will increase.
Can you see the difference from my advice??
So don’t assume things over here.
1 more advice, try to use debit cards instead of credit cards, preferably.
58) Richard Tan on August 29th, 2009 3.49 pm
exactly that is what the goverment mention the LEE KUAN YEW AND PAP
we will give you a better life to live and to prosper and to archive faster into your coffins
but ops! stop!!
you die is it? ok pay first then you will get a space to be buried. or a trip for your body to be burn. expensive you know the fire to burn your body.
if you got no money it’s ok goverment will help you. they will advice you that they can’ t do anything and pity you. so you keep the dead body at home and wait till you save money then send to be buried or burn
ever heard singaporeans borrow money to arrange for funeral?yes we saw already.
but if LEE family or PAP die. they will be in a gold plated coffins with aircon and don’t forget camera install for family to see each day the body rotten up. and the coffin will be cover with singapore flag and carry by military. wow what a great respect they deserve. what actually they do to deserve that? can we singaporeans get that too??
excuse me singapore flag is expensive you think lee kuan yew will spend his pocket money on your dead body to be cover and respect?
are you ok??
64) modern malay pahlawan on August 29th, 2009 5.19 pm
maybe lky give black plastic bag to pack your body and throw one peanut inside together with your dead body.lol
sorry hor! one peanut to them = $600k.
those freaking misers govt so generous? dust from peanut shell also don’t have haha :-)
hmm……..we just ask ask only lor….sorry ah pap.
anyway we die our own buisness lor but when alive is PAP buisness.
when ECONOMYdown so the GST must go down our singaporeans THROAT too. that is what is what they refering too. maybe st miss out that sentences or words. can st check and republish?thanks
[i]Can you see the difference from my advice??
So don’t assume things over here.
1 more advice, try to use debit cards instead of credit cards, preferably.[/i]
assumed what?
lacky can’t you just uttered ok lowered minister salaries lowered gst…
what so difficult?here you come again tryin limsiasuayed mouthpiece
go to the bank seek a debit card instead of credit card
(as though majority of the singaporean is qualified for 1?..every singaporeans earned an annual salary of $thirty thousands dollars mey?)
so what to assume?
limsiasuayed just finished his speech in parliament
go etch him an ntuc branded mineral water, please pay on the way out
don’t ASSUMED the minieral water is FREE..you ain’t marboroughtan yet!
#69 incikencik
Ghim Moh Resident was giving general advice that could be followed by both supporters of PAP and any Opposition. There was nothing that implied he was either a PAP or Oppo supporter. No need to troll him for giving a neutral view that was informative to some readers.
go to the bank seek a debit card instead of credit card
(as though majority of the singaporean is qualified for 1?..every singaporeans earned an annual salary of $thirty thousands dollars mey?)
Ghim Moh Resident didn’t mean that everyone should seek one, he meant that instead of getting a credit card, Singaporeans should consider a debit card. No reference to rich-poor classes at all. No need to troll so fast. Relak.
Thank you for your advice, Ghim Moh Resident. I am sure there have been readers who have benefited from it (:
10) theforgottongeneration
///////. The only multi-billions “projects” visible since then are the IRs////////
IR is not an govt expenditure, but a revenue really, URA collected a whopping $ for the IR land, IR project itself is funded by Sands
9) Oxford Dude
//// Essential goods and services should be exempted completely from GST. Electricity, petrol, diesel, public transport fare, and staple food items such as rice should be exempted. //////
I agree with you on this.
38&39) RW
Good points
59) Ghim Moh resident
I empathise with the jibes you are getting.
If you do not agree with some of theese posters, you are automatically branded PAP supporter, PAP balls carrier and umpteen variations of similar nature.
It’s either you are with them or you are pro gahmen. A over simplistic black and white world some people think they live in.
“When the economy dives, the GST must too, ”
Unfortunately this is not so !
It is like waititng for the famiLEE to take the dive from top floor of CPF building.
indeed wellspoken
kopitiam ahpek lived in a white world while the peasants lived in a dark black world
black N white indeed
is that why pap party wore WHITE while oppositions wear black or dark blue?
[i]for the IR land, IR project itself is funded by Sands[/i]
than feel free to share why is ntuc inc helpin sand as though sands are FREE….
76) incikencik
so you are saying Marina Bay Sands is owned by NTUC?
54) modern malay pahlawan on August 29th, 2009 1.08 pm
“voted out PAP is already 80%confirm from all the singaporeans we heard. but yet to see the real vote. ”
Though I like what you say,
I respectfully have to pitty you.
The readers here are the minorities.
Yes, readership has increased but this does not mean it has reached the majority.
I like to talk to strangers to get a feel on the ground whenever I am outside.
Just today, I struck a conversation with 2 youths of minority race. They are aged between 18 and 23. Not surprisingly I found them to be OBLIVIOUS of current affairs:
1. TC – dunno. what is that? can makan or not? service and conservancy charges? new thing is it?
2. T invest fiascos – ‘T’ for toto? total ignorance.
3. Transparency – they thought it is for overhead projectors.
4. Losses and effect on their losses. They thought I joking.
I vomitted blood 4 times, internally.
higher GST is to make sure the poor dun hoard $$$? than come old age the same people will say things like…
“you should have saved enough when you were younger”,
“you dunno how to manage your own money that why old liao dun have enough”,
“you got children?” they will forget that roof over head not secure babies won’t come,
“be thankful you are S’porean”,
“higher GST is to help you (die faster)”
lol…
78) spin docsor on August 29th, 2009 11.35 pm
54) modern malay pahlawan on August 29th, 2009 1.08 pm
“voted out PAP is already 80%confirm from all the singaporeans we heard. but yet to see the real vote. ”
Though I like what you say,
I respectfully have to pitty you.
The readers here are the minorities.
Yes, readership has increased but this does not mean it has reached the majority.
I like to talk to strangers to get a feel on the ground whenever I am outside.
yes we did and not only two singaporeans that we spoken to but don’t be shock it is already exceed 127 for now. not only here but we print out every issue and comments and even gather the news that OUR LKY the wise man had ask our KIND ST to publish. we as a singaporeans will keep going and will put out PAP this time. if any singaporeans there care for your future generation and your love ones and believing that this is your land. then we would say one thing.
time to vote out total PAP and bring down lky to the ground. this people are so high up that they can hardly hear what singaporeans are saying. perhaps now even.l they can’t be bother but instead look at the news lately.
two man carry singapore flag on the top of mountain?? must as well carry the family photo of the LKY AND PAP and show the world.
what we are questing them and what are they publishing?
you singaporeans know what? they are trying and trying to divert out attention. it is just they go a little bit bigger circle this time. so we singaporeans fools will follow the big circle once tired we will sit down.
are we really a FOOLS???
let see this election!!!!!!!
they keep publishing how proud singapore is.how important the flag means
how well he taken care of singaporeans how he devoted his entire life and family for singapore from last……………………………………………………..time
so he keep saying in the news and bring out all the books from last…………………………………………………………………time until now
but did he bring out what will happen from now until the next……………………………………………………. years to come?
if he ever bring out the truth of what he will do and changes he will make that he fear singaporeans may not accept will he still talk out? he will just save it for the election to be over and there he goes throwing hot stones on us.
hot no hot you singaporeans business not my business. you voted me already right??? so go and do your work singaporeans and thanks for the vote. just thanks and that’s it.
62) Ghim Moh resident
I agree with you on the Card issue….though in the past I strongly disagree with your other views…
i think alot of singaporeans youth tend to leave beyond their means…wanting to buy rolex, panarai etc etc watches….mont blanc pen…designer eyewear and bags….when they could barely afford it…
some of them make use of credit cards 0% installment plan to make multiple purchases…. but slowly and surely becoming a card slave…
but sometimes, the bank allow people to attain a credit card too easily…but i agree with GMR cos we have to spend within our means..but GMR, our means is getting smaller and smaller while the cost is escalating….
[i]Litigatori on August 29th, 2009 6.47 pm
Ghim Moh Resident didn’t mean that everyone should seek one, he meant that instead of getting a credit card, Singaporeans should consider a debit card. No reference to rich-poor classes at all. No need to troll so fast. Relak.
Thank you for your advice, Ghim Moh Resident. I am sure there have been readers who have benefited from it (:[/i]
he is just echoeing what all the MINISTERS lipsync do this spent less eat less buy less blah blah blah
meanwhile, the hospitals/schools will tell your childrens what they need to BUY in order to be on par with their current minimum requirements
where on earth are the commonors goin to fund it it not the ministries problemo
the motto is simple
JUST DO IT
who cannot give advises? i also give free advises to china chinese by TELLIN them singapore do NOT have streets paved with GOLD/gemstones as well
We should as k govt to breakdown the absolute amount and % of various taxes they collect from us each year
GST ( less rebate for tourists )
Personal income Tax
Corp Tax
Property Tax
Vehicle Tax
COE
Estate TaxEnetrtainment Tax
Import Duty
Building Tax
Land Tax
>> 85 Wilson Li.
Why so leh chey?
Just see what is the budget + surplus/deficit every year, and you know how much tax they collect already. Basic finance says money in (tax) = money out (expenditure+ deficit/surplus).
The question is who pays how much taxes.
If some rich millionaire pays estate tax, contributes to the tax, i don’t really care.
it’s the tax i pay that matters.
But then, who is the “I” in question?
everyone pays different amount of tax.
for a person who takes MRT/Bus, and squeeze with thousands of people, i am not sympathetic to COE either. my take is just take bus and squeeze lah.
but of course, not everyone shares my opinion!
incikencik
post #84 on August 30th, 2009 2.44 pm
“who cannot give advises? i also give free advises to china chinese by TELLIN them singapore do NOT have streets paved with GOLD/gemstones as well”
maybe S’poreans are suppose to treat the China FWs as brothers & sisters, employ them while local lose jobs (must be gracious har), & while on the job give them (dunno how much) time to pick up english language. yet S’poreans are not employed due to “lack of job experience”, no track record (employer not flexible eh), ability to handle chinese speaking customers (you locals help China staff be translator when got english speaking customers!)…
SGD = Solid Gold Dollars to some FWs!! lol… :P
[i]maybe S’poreans are suppose to treat the China FWs as brothers & sisters, employ them while local lose jobs (must be gracious har), & while on the job give them [/i]
everytime when i visit my china ancestor home, i alway have locals seekin my assistances for lobang to enter singapore by hook or by crook and everytime i had to turn them down..some even worst..just because they are my ancestral cousins by birth/rank..they too assumed i am sunyetset the man himself who could performed miracles..i alway tell them..i am not tantockseng’s great great great grandson…so please don’t looked @ me…
@70) KopitiamApek on August 29th, 2009 7.05 pm
” …..IR is not an govt expenditure, but a revenue really, URA collected a whopping $ for the IR land, IR project itself is funded by Sands….”
Great, so all the billions collected go (and only) into ….. TH investment portfolio? I know they did spend 125m on 3 new nursing houses, after the remark for S’poreans to ‘consider’ retiring in JB.
First of all, they dare say GST is to help the poor – it’s so much help that the poorest suffer the higher rate of inflation…
And to think that Singapore is such a technologically advanced country and the gahmen cannot exempt essentials from GST, citing logistical difficulties and other hubris – hell, even an “outback” country like Australia can do it…tsk tsk tsk
To cut a long story short…
Lower GST?
Not a ghost of a chance…
The governemnt has budget surplues of about $20B each year, and one would assume that during recession, GST cut would help to simulant the economy and use the budget surplus to cover the cut in GST. Today, we heard that in Japan, the ruling party of the last 50 plus year had be replaced by the opposition. Could Sinkapore do the same? Maybe it is time to give other party a go at runing the country.
Ya, GST is to help the poor and foreign workers are to help Singaporeans have jobs. Funny only the top scholars accept such crap, not ordinary citizens.
Lower the GST? How can?
Who is going to pay the millions $$$ to keep the ministers honest?? Without those big fat salaries, those elite ministers can become thieves and conman you know?
Re: 91) george on September 1st, 2009 3.32 pm The governemnt has budget surplues of about $20B each year, and one would assume that during recession, GST cut would help to simulant the economy and use the budget surplus to cover the cut in GST
Hello, don’t forget the Temasek lass is $50B to $60B, though these money are stored in different accounts, but they are both people’s money.
pap is “kind” not to make a GST gp to 17%, they just raise the cpf’s minimum to $117K, an extent that you get less than 1/3 for your retirement, after discounted with inflation, assuming you must work until 62, or 65…