GST to be raised to 7%
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saw this on a blog...
ANNUAL BUDGET STATEMENT, 2002 May 15
Mr Steve Chia Kiah Hong: Thank you, Mr Speaker, Sir, for allowing me to join in this debate. I would like to take this opportunity to congratulate the Deputy Prime Minister and Finance Minister for his maiden Budget Statement. There are several proposals that I support. However, there are also some concerns that I would like to take this opportunity to raise.
First, like several other MPs yesterday, I want to talk about the impact of the GST on the poor and the ageing Singaporean workers. Second, I disagree with cuts in the top marginal personal income tax as a means for promoting business. Third, the corporate tax cut is not bold enough to increase 's competitiveness. Fourth, as moves towards greater indirect taxation, the anticipated impact of future GST increases should warrant exemption of essential goods and services from this tax. Last but not least, I support Prof. Chin's call on the Government to use the funds collected from the additional COEs to help HDB cover its car park building cost.
As I study the impact in detail, I become more and more convinced that these Budget changes and the recommendations of the ERC are from the rich, by the rich and for the rich - to make the rich even richer. The income gap between the talented and the workers is going to widen drastically. More has to be done to help the poor, the unskilled and the untalented to cope with this rising wealth gap. Otherwise, in our effort to rebuild our economy, the social cohesion and fabric of our society will risk being threatened and crumble in the long run, leading to detrimental results.
It is quite certain that after the five years of offset measures, the lower income and the ageing workers will become poorer, especially for the ageing workers who had been paying taxes in their younger days. Over the last 30 years of nation building, they had contributed in their own ways to help build into this developed society. They, the older workers, are retiring soon, or some of them have already retired. But they are going to continue to face paying GST right up to their deathbeds and even into their coffins.
This is not right. The Government should look into how it can waive the GST completely for the retirees and senior citizens. They have done their share of duty to serve the country. We should recognise their contribution and exempt them from this tax burden in their twilight years. The Government may have recognised this problem and adjusted the pension allowance for retired civil servants. But how about many other retirees and blue collar workers from the private sector? I believe the Government can do a lot more for this generation of nation building senior citizens not from the civil service too.
Next, coming to cuts in top-end personal income tax to 20%, I do not think that this is a useful move. The Minister had argued for a significant reduction as a means to attract international talents to work in and help create more jobs. Is that equation really that simple? I do not think so. I believe that talented high-income earners will not just flock to because of the lower individual tax rate. In any way, 20% is not attractive enough compared to other countries like . They will consider the total package. Factors like pay compensations, a more conducive living environment, cultural adaptations and other examples of cost of living, like car ownerships, will play a bigger consideration than simple tax cuts. If they have to spend more of what they earn by paying more indirect taxes, like higher liquor charges and car costs, then they will not be interested to come to in the first place. These talents are not stupid. It does not make sense for them to save on direct personal income taxes but pay a bomb to own a branded car or a pigeon hole in the sky.
Taxes are taxes, direct or indirect, it is cash outflow from the individual to the Government - be it income tax, GST, ERP, COEs or fees, it still adds to the Government's coffers. Therefore, we need more than personal income tax cuts to encourage talents here to help spur our economic activity and entrepreneurship. If the Government is genuine in wanting to encourage entrepreneurship through tax reductions, then it should consider waiving the tax liability of start-up business persons in the initial few years until their business is more stable and profitable. A larger "entrepreneurship income tax relief" can be introduced to help start-up smaller businessmen. It will definitely be more helpful than the top-end cut of 6% for already successful high income earners. Any tax waivers or rebates given to a new start-up business person will definitely help to plough back to help their business grow more and survive.
How many entrepreneurs just starting out can make disposable income of more than $320,000 a year to qualify for the 6% cut in personal income tax? Not many! I personally do not know of any. Maybe the Government can give us some examples of which entrepreneur has achieved this. This will help more Singaporeans to emulate their success. Incidentally, not all high income earners are entrepreneurs. Many in happen to be working in the Government service. It is clear that they will be one of the greatest beneficiaries of this tax cut. They earn very high income with zero risk of business failure attached.
But for the private sector, I wholly support the cut in the corporate income tax. However, I feel that this ERC proposal is not bold enough. If countries like , as cited, can reduce its corporate income tax from 40% to 25% in one year, we can do better than the miserable 4.5% cut over two years. We can be a lot bolder in cutting corporate income tax to keep us ahead of the competition. When a company has more retained profits, it will be bolder in employing more people, thus helping to create more jobs and helping the economy. If foreign companies intend to take advantage of this lower tax benefit and relocate to Singapore, their employees will have no choice but to move here too or they will face retrenchment back home in their country. There is no need for us to cut the top marginal personal income tax rate just to attract these companies to come over here.
The Government should save on cutting top marginal personal income tax for the rich. By doing so, the Government will save $620 million every year. This saving can be used to offset a bigger and bolder cut in the corporate tax rate than the 2.5% recommended.
Mr Speaker, Sir, I will now move on to talk about GST. Many speakers here have talked about the effects of the increase in the GST rate and have asked to delay its implementation. There is also a suggestion that certain items be exempted from GST. The Government has said no. Like many Singaporeans, I do not understand why the Government is so unwilling to exempt essential staples from GST. If the Minister finds it so difficult to decide what items to exempt from GST, be it sushi, fish or rice, then may I suggest that the Ministry of Finance send an investigative delegation to other developed countries with GST exemptions on these essential goods and services and study how these countries do it.
If these countries and some states like in the can have a system where certain essential goods like rice, oil, sugar, salt, meat, vegetables, fish, etc, or services can be exempted from GST, I do not see what is so difficult about implementing it in . Where there is a will, there is sure to be a way, unless it is the Government's intention to raise as much revenue as possible from GST. If so, I have nothing to say. If not, I will give one very good reason why these essential goods and services should be exempted from GST.
Currently, the GST rate stands at 3%. Come January, it will be increased to 5%. Five years later, maybe after the next general election, it may again be raised, perhaps to 7%, 9% or even 12%. I do not know how much higher it can go, but I am very certain that every percentage increase is going to affect everyone, but more so for the lower income, the poor, the unemployed and the retired.
When GST is all-encompassing and raised even higher, it is going to make living in more miserable and create greater social inequality, resulting in resentment to Government institutions. Citizens need to eat and drink to live and survive. It will become unbearable for less well-off citizens just continuing to eke out an existence here. Their lives will become more miserable as they have less purchasing power.
Looking at the trend, I am quite certain that there are going to be more cuts in the personal income and corporate tax rates in the future. To make up for this revenue loss, it is certain that the Government is going to raise GST even higher.
So before this GST is increased to 5%, 7%, 9% or even higher in future, I hope the Government can plan ahead and institute a system to exempt certain essential staple items from GST. Do not wait until there is great social discontent to do it.
Once such a system is institutionalised, any future increase in GST to a very high level will not cause severe hardship and political ramifications. Those who find that the tax on sushi is too high can still opt to buy plain rice and fish, with the option of not going hungry just to save on GST. The freedom of choice is there and this is very important.
Mr Speaker, Sir, as we progress into this developed world, let us work together towards a kinder and more caring society. Let us not subject our lower and middle income citizens and our aging community to more stress, hardships and taxes.
At my Party constituency walkabout in Jurong West two Sundays ago, I spoke to a senior citizen who said to me, "Given a choice, I would rather return all the ERS shares and rebates to the Government if I have the option to be exempted from GST. These rebates and grants are short-term measures to ease our pain, but GST is going to stay with me till I go to my grave. I would rather not have it. I paid taxes when I was young and working. Now I am old, unemployed and waiting to die, and I still have to pay taxes. This is unfair."
Mr Speaker, Sir, I hope the Deputy Prime Minister and Finance Minister can take the words of this old man into due consideration and look into how retired senior citizens and the lower income can be exempted from the effects of GST. I believe that the most efficient and equitable way is to identify a list of these essential items and exclude it from tax. If it is so easy for NTUC Fairprice to produce a list of such staple items and absorb the GST increase, I believe the Ministry of Finance can do a lot better than a blanket no.
Finally, Sir, I want to talk about car usage and car parking. If we want to allow more Singaporeans to own cars but encourage them to use it less often, then we must have incentives to encourage them to keep it stationary, ie, not to drive it. Increasing car parking charges is definitely not an incentive.
To the car owners, whether it is money paid to HDB, URA, LTA or the Ministry of Finance, it is still money going to the Government. The Government should consider the total revenue it collects from cars and look into subsidising some of these loss-making departments within the Ministry that help to solve and regulate car usage.
We cannot expect every department in the Ministry to be always profitable. There will always be some departments that cannot. If every department in the Ministry must be profitable, if HDB has to build car parks and make them profitable or at least break even while other ministries make a lot from COE, then it can only mean one thing, ie, our citizens will become poorer and poorer through all these taxes. I hope the Government will not insist that every Government service must be able to recover cost.
Steve Chia -
I think SG in future will be a resort for Ang Moh to enjoy their retirement. Then all the Pure Singaporean will be in some other place on Mummy Earth.Originally posted by Hogzilla:No.
I think I expect that to happen fastest in 10 years time. So I'm planning to be a quitter.
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100% YES!!! even he is a cheater, murderer or rapist. cos i just hate the fact pap members are governments.Originally posted by shinta:i've got a question.
if the opposition in your estate sux... will u vote for teh opposition?
the more power pap gain, the corruption it become!
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Wait har, just remember something after I saw Elite girl's adventure.
Since the reason (I use reason, because it's the excuse PM Lee gave for GST hike) for GST hike is economy recovery, then shouldn't employer's CPF contribution be restored to 20%? So how can you say the economy has recover to have a tax hike when you say it haven't recover to the point of restoring employers' CPF contribution? What kind of lame excuse is that?
Actually I'm not asking much, the employer CPF contribution rate need not to be 20%, just increase a bit will do. -
like what ditzy said.. 1% annually will doOriginally posted by Hogzilla:Wait har, just remember something after I saw Elite girl's adventure.
Since the reason (I use reason, because it's the excuse PM Lee gave for GST hike) for GST hike is economy recovery, then shouldn't employer's CPF contribution be restored to 20%? So how can you say the economy has recover to have a tax hike when you say it haven't recover to the point of restoring employers' CPF contribution? What kind of lame excuse is that?
Actually I'm not asking much, the employer CPF contribution rate need not to be 20%, just increase a bit will do. -
Originally posted by 798:100% YES!!! even he is a cheater, murderer or rapist. cos i just hate the fact pap members are governments.
the more power pap gain, the corruption it become!
so u rather rapists. murderers, cheats to rule the country... -
798 just got the GST hike get the better of him (or her, I dunno, so I guess "him" lor).Originally posted by shinta:
so u rather rapists. murderers, cheats to rule the country...
I dun mind rapist and murderer, as long as they dun do that when they are in office . But cheats? No thanks. If I get cheats to rule the country, I'd rather PAP do it. -
Ya the middle income are the worst off.Originally posted by Gordonator:i think gahmen should only increase GST only for luxurious items and not daily necessities like rice, oil, water and electricity etc. cos many singaporeans are in the neither here or there category, they are not poor until cannot support themselves or rich enough to keep ends meets. they won't be able to sign up for all those schemes gahmen is coming up to help them.
The poor gets help from govt, the rich don't have to worry.
The cost of living keeps going up, very little left after paying housing loan, children's edn., medical bills etc
Most of us won't have any savings for old age.
Very soon all the middle income people will become the new poor. -
i don't know if anybody posted this letter here. i totally agree with the author that the govt shouldn't be too obsessed with increasing our reserves but should use them to help the needy.
TODAY
Surplus better spent on the needy than on boosting reserves
Monday • November 13, 2006
Letter from Leong Sze Hian
I REFER the report, "The sacred cow's here to help" (Nov 11).
The main thrust of the debate in the current Parliamentary session has been on the need to do more for the needy. I think it is not so much a question of doing more, but how much more? How much more money should we spend to help the needy?
In this connection, I would like to echo MP of Ang Mo Kio GRC Inderjit Singh's remarks that "we must be willing to creatively utilise more returns of Government funds, including our reserves, so that we can have a more predictable set of help measures".
Despite spending "four times more on social assistance in the last five years", the Budget has continued to be in surplus, almost every year.
Singapore's estimated foreign reserves of — according to The Economist magazine — about US$132 billion ($205.3 billion), was ranked eighth in the world (a 2005 estimate) in the World Factbook. According to a report by the Hong Kong Monetary Authority, in terms of per capita holding of foreign reserves, Singapore has previously been ranked as the world's number one.
Harvard University's Dani Rodrik argues that there are social costs to the over-accumulation of foreign reserves.
He has estimated these costs now amount to around one percentage point of Gross Domestic Product (GDP) annually, for developing nations taken as a whole.
There may be a fine balance between welfarism, "unconditional needs-based social safety nets", and the merits of a work ethic culture.
If the data from the Department of Statistics' (DOS) Household Expenditure Survey 2003 is anything to go by, about 40 per cent of households spent more than what they earn monthly.
And in the General Household Survey 2005, the bottom 10th percentile had no income from work, the 11th to 30th percentile had declining incomes from 2000 to 2005, and in inflation-adjusted terms the 31st to 40th percentile of households also had declining incomes, against the backdrop of the rising costs of living.
If too many Singaporeans are finding it hard to make ends meet, with little savings for the future or retirement, it may have a negative and eroding effect on our work ethic, which has been described as the heart, the success and the identity of Singapore.
At the end of the day, people may only be able to have or maintain the right work ethic and attitude if they are happy and can see the fruits of their labour.
Has this contributed to Singapore's drop in the world service standards ranking from 17th to 26th? ("Singapore's service slip-up", Nov 9).
Perhaps in the final analysis, we may need to review, among other things, the social costs of whether and why we need to keep increasing our foreign reserves. -
i think... he's like this since before electionOriginally posted by Hogzilla:798 just got the GST hike get the better of him (or her, I dunno, so I guess "him" lor).
I dun mind rapist and murderer, as long as they dun do that when they are in office . But cheats? No thanks. If I get cheats to rule the country, I'd rather PAP do it. -
in this case.. the poor gets it too... its the extremely poor... that gets help from govt..Originally posted by gerrykoh:Ya the middle income are the worst off.
The poor gets help from govt, the rich don't have to worry.
The cost of living keeps going up, very little left after paying housing loan, children's edn., medical bills etc
Most of us won't have any savings for old age.
Very soon all the middle income people will become the new poor. -
HK can afford to lower their corporate taxes for many more rounds, if Beijing with a US$1 Trillion reserves is agreeable. Are we going to raise taxes to make up the loss in corp. tax cut in tandam with HK every move?
Singapore has spent too much in defence over the years. Do we really need to spent S$10 billions dollars (current year allocation)?? THAT IS A WHOPPING TEN THOUSAND MILLIONS DOLLARS. S$10,000,000,000/-. ! -
Agree, but we are selecting our MP to manage our RC not our country.Originally posted by 798:100% YES!!! even he is a cheater, murderer or rapist. cos i just hate the fact pap members are governments.
the more power pap gain, the corruption it become!
Many ppl have misunderstand the meaning of election. -
wat i meant is... dun always listen wat the 149th media said... since they have selective perception toward ruling party n finding ways to shame the opposition.Originally posted by Hogzilla:798 just got the GST hike get the better of him (or her, I dunno, so I guess "him" lor).
I dun mind rapist and murderer, as long as they dun do that when they are in office . But cheats? No thanks. If I get cheats to rule the country, I'd rather PAP do it.
pap to me are more like wayang party.
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The problem ppl have had written on their face, many a time I find that living in this rat racing pl have made me feel very negative. It's a ppl where everybody are no happy. I want to understand why gahman are so worried about having not enough money, issit for the ppl or mainly to attract investment?Originally posted by pearlie27:If too many Singaporeans are finding it hard to make ends meet, with little savings for the future or retirement, it may have a negative and eroding effect on our work ethic, which has been described as the heart, the success and the identity of Singapore.
At the end of the day, people may only be able to have or maintain the right work ethic and attitude if they are happy and can see the fruits of their labour.
Has this contributed to Singapore's drop in the world service standards ranking from 17th to 26th? ("Singapore's service slip-up", Nov 9).
Perhaps in the final analysis, we may need to review, among other things, the social costs of whether and why we need to keep increasing our foreign reserves. -
btw how much do our govt spend on helping the poor every year?
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Yes, true that GE is to select MP to manage RC. Have you forgotton about the no. of seats in the parliament? Those people you choose are going to be those people who are gonna stand up for you in the parliament house. If you elect the PAP, they are the ones that give you 7% GST as early Xmas Gift. Enjoy.Originally posted by T.Ryousuke:Agree, but we are selecting our MP to manage our RC not our country.
Many ppl have misunderstand the meaning of election. -
I had said b4 liao, everyone know it, is just that ppl r try give stupid excuses to support them! When is the peak on nos. of opposition party in history then?Originally posted by Syndicate:Yes, true that GE is to select MP to manage RC. Have you forgotton about the no. of seats in the parliament? Those people you choose are going to be those people who are gonna stand up for you in the parliament house. If you elect the PAP, they are the ones that give you 7% GST as early Xmas Gift. Enjoy. -
er.... let me think......Originally posted by dragg:btw how much do our govt spend on helping the poor every year?
1)ST Pocket Fund for poor kids - by the people
2)NKF to help the poor - by the people
3)President Challenge for Charity - by the people
I think they only help themselves with the huge fat pay cheque
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maybe singapore pools is the only GLC to donate to the poor.Originally posted by LinYu:er.... let me think......
1)ST Pocket Fund for poor kids - by the people
2)NKF to help the poor - by the people
3)President Challenge for Charity - by the people
I think they only help themselves with the huge fat pay cheque -
wrong again. take $1 give back 50centsOriginally posted by dragg:maybe singapore pools is the only GLC to donate to the poor. -
This one also donated by every poor Singapore gambler!Originally posted by dragg:maybe singapore pools is the only GLC to donate to the poor. -
i am one of them.Originally posted by T.Ryousuke:This one also donated by every poor Singapore gambler!
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Seriously, who think that the gahmen got give enough help to those poor people? Gahmen just distribute the peanutz money of OURS to them and like that means help liao.Originally posted by dragg:btw how much do our govt spend on helping the poor every year?
Since ministers are the ones that are highly paid. Should organise a Ball Room party for them and let them raise money from their pocket for the needy. So how much can they collect instead of organising President's Challenge or wateva blah blah.. -
the govt made it clear that there will never be any help or free lunch. Pre-election goodies are now being collected back many-folds, help for the poor must come from some where other than the coffers. That's 66% mandate for you isn't it. Seriously, being a donkey voter looks better with ever passing day.