Posted by: incywincy | November 14, 2006

GST will go up to 7 per cent

Singapore’s PM Lee announced yesterday that “the Goods and Service Tax (GST) will go up from 5 to 7 per cent to pay for more government spending to help the lower income.” (ST, 14 Nov)

Well, all’s great, it seems, doesn’t it?

Oh waitaminute! Aren’t we forgetting something? Yes! Poor people still have to buy food, pay bills, etc., all of which have GST too! And wait! There’s more! How about people who are in the lower middle income group? Why aren’t they getting ‘help’ too? They know they’re struggling too, but you don’t! And yet there’s more! How about us, foreigners, who aren’t eligible for ‘help’, but are in the low income group as well?

Didn’t any one think of that? Or is it that it’s none of your concern?

Remember, you who live comfortably in your condos and landed properties, and make such decisions without consulting your residents, that when you tax the rich, you are also taxing the poor.

“Sorry boss, I think I’m gonna have to start charging you GST for my salary.”


  1. There’s always other places to go, hur hur.

    Earn in Singapore, spend overseas. Smart eh?

  2. you’re kidding right. one year is all i’m blardy away for and i come back to even more expensive stuff. *geeeeeeeez*

    but i do miss home. Boo hoo hoooo

  3. ehh ehh i know bb! we earn in singapore.. we live in JB! ok! muahhahahahahahaha.
    clever ppl. *smug*

  4. jess.. dun worry.. it wil go up only in feb, which is after u have already left for ur honors year in UQ. haha..

  5. GUYS! *snap* Earn from the world, spend it worldwide. Make your business a global one. Be a little more far sighted! Singapore will be too little a red dot for me to care soon…-grins-

  6. exactly this is where singapore comes in if u wish to earn and spend worldwide, and make your business global.. this is the little red dot no serious businessman can afford to miss, not for its domestic market but for its government.. it’s unlikely u can find a better place to set up your base..

    anyway, the effect of GST rise on most businesses is minimal, juz a flow through… buy with GST, sell with GST..

  7. well, but in the process of earning, we already have to spend.. if i earn here.. i still have to spend here.. n if i do that.. i wil nv have enough to migrate to other places..

    something funny… yesterday on CNA, someone from KPMG said: GST rise will affect companies that absorb GST.

    HELLO! it doesnt take a genius or economist to know that lor. bah.

  8. “Mr Yeo of Ernst & Young explained: ‘Most businesses won’t be affected by the GST hike because GST, essentially, isn’t a cost to business. It’s a flow-through effect for them.” – Business Times 14 Nov

    KPMG’s Mr Lam was referring to non-compliance. Higher GST leads to higher penalty for non-compliance. The effect is such that businesses can no longer leave GST matters to low level staffs bcoz small errors become riskier now.

  9. Big economic argument there. 😀

    The base idea is that the rich spend more, and thus any tax on purchases has an affect on the rich more than the poor.

    Err, many arguments.

    In the US, we don’t charge tax on fresh food, since we assume everybody has to consume a (mostly) equal amount of it, and that it is fairer to tax other items instead.

    All our services are taxed differently. Cable TV has a different set of taxes than cell phones which have a different (but related!) set of taxes to regular phones.

  10. hi devlin, this is interesting. i didn’t know that fresh food is not taxable in US. that makes for better welfare for everyone, doesn’t it? the amount may seem little, but when added up, i guess it’s quite a bit!

    xiaoluo, when u become politician, please lobby to remove tax from fresh food. 🙂 haha.

  11. Haizz I’ll say the dismal truth.. This kind of selective taxes are good for income distribution to help the poor, but everything comes with a cost… The benefit is short-term, but the cost is in the long-term. The distortion is costing what the economy as a whole can achieve potentially, which means costing the poor’s children too (long term). It’s called deadweight loss. That’s partly why the US is not as free a market as HK.

    The ideal form of tax is to tax everything, including leisure time (not joking), so that distortion is minimal. Since this is not possible, we levy higher taxes on things that are inelastic in demand (Ramsey’s rule for those interested), e.g. cigarette, alcohol. U see this in SG, which is very smart as they generate negative externalities too. But daily necessities are inelastic in demand too, so this is where gov has to make a choice.

    A less distortionary option of selective tax is to give out equivalent cash that the beneficiaries gain under selective tax. And again this is attempted by SG in giving out cash during crisis and bonuses.

    u can see why economics is called the dismal science

  12. u gave me a dismal headache after i read thru that.

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