Wednesday, March 02, 2011

PAP MP : Cutting GST does not help the poor....

You know how far down the standard of debate has fallen when an MP stands up and argues that cutting the GST does not help the poor. GST is a regressive tax that penalises the poor the most because they spend most of their income. If you're Wee Cho Yaw or Peter Lim you spend maybe 2% of your income and invest the rest, so you pay 0.0014% of your income in GST. Why was GST implemented? Before our income gap ballooned to what it is today, the PAP govt openly admitted that the purpose of GST is to cut corporate tax and the income tax of high income earners. This is seen from the 2003 budget statement by the then Finance Minister Lee Hsien Loong:

"4.3 From YA 2003, I have decided to cut the corporate income tax rate from 24.5% to 22%. This 10% reduction will save businesses $700 million a year.

4.4 Also with effect from YA 2003, the top marginal personal income tax rate will be cut from 26% to 22%, with corresponding cuts in all income bands. This will reduce the tax payable by most taxpayers by 13% to 16%, saving them $620 million every year.

4.5 I have decided to raise the GST rate from 3% to 5% from 1 Jan 2003. The increase in GST is expected to raise an additional $1.3 billion of tax revenue per year."


If you total up loss of revenue from the corporate tax cuts and the tax cuts for highest income earnings, it is equal to the amount gained from the increase GST. This means that the poor who did not pay income tax had to fund the cuts for the rich through GST increases. In 2007, many Singaporeans became concerned about the income gap and the poor among us, the govt used this as the reason for GST hike ("gst hike to help the poor"). As they do this, they slashed corporate taxes again by 2%, that alone would take away more than half the amount raised by the increase
in GST....so before any help got to the poor more than half the GST hike went to fund corporate tax cuts[Link]. To date we have not seen govt figures of how much help eventually got to the poor - according to Leong Sze Hian ..not much[Link].

What I'm very sure of is our poor are worse off today than they were before the 2007 GST hike. The combination of rising cost of living and stagnant wages means much more needs to be done. If you look at the escalation in the cost of medical care, housing, transport, utilities and food, they simply overwhelm the meager help from the govt. We are all frustrated with govt dithering, bogus intentions and dubious arguments - Tharman actually came up with numbers to show the govt helped the "generous subsidies"[Link]. The true measure of whether the poor are really getting sufficient help is their quality of life...has it improved in the past 4 years? Find me a person who dares to say "yes" and I'll show you he's a liar!

64 comments:

Anonymous said...

Lucky.......Singapore's future depend on people like you - definitely not that MP. Please come out and be counted - for the sake of the nation and people.

Anonymous said...

By now, most Singaporeans are acutely aware that 'GST to help the poor' is pure hogwash dished out by our political leadership. Due to this, their(leaders) credibilities have also gone to the swine. The people will not swallow it anymore.

Just do the right thing in the Coming Election, vote in all the Oppositions and we can cut down and reduce much of the sufferings and torments that we have subjected ourselves to due to our foolishness. If we fail again this time, then it is only fair that we blame ourselves for 'having no stamp in our eyes', lack of vision and wisdom.

patriot

Anonymous said...

I definitely agree that GST disadvantage the poor more than the rich.
The GOVT needs to cut off GST from Medical and essential services which the majority of the poor can't do without.
People of Singapore, we need more non-partisan voices in parliament!

Anonymous said...

Until todate, I just cannot comprehend how the complete Band of PAP brothers think and say the same things. Mind you, these are scholars, so have they completely lost their marbles or have we ours.

Anonymous said...

This De Souza has made himself a laughing stock for all educated folks. Sad state of the PAP today. If the party continues this way and cannot self renew, then the people will have to do it for them.

Anonymous said...

All the questions you see in Singapore parliament are submitted & screened at least 4 working days before parliament sits. Singapore is unlike overseas parliaments where MPs can raise questions on-the-spot and Ministers and Prime Minister must answer on-the-spot too.

Harmless questions by PAP MPs are forwarded to the respective Minister(s), who then pass the questions to their various ministries. Superscale Admin Officers and other civil servants will then fall over themselves to do research, dig up statistics, and draft a template answer for the Minister(s) to read out in parliament as "answers" to PAP MPs "queries".

Questions put forward by Opposition MPs are send to a PAP task force comprising of Cabinet Ministers and senior trusted MPs. They will scrutinise and debate the Opposition's questions and decide on who should do the rebuttal. The rest of the PAP MPs will also be informed of the Opposition questions. PAP MPs who want to rise up the ranks and be seen by LKY, LHL etc as being "capable" will volunteer to answer and rebut the Opposition.

That's why you see 5 PAP MPs all coming out to answer back Low Thia Kiang's suggestion on GST. Never mind if their reasoning are nonsensical and unsubstantiated sweeping statements, or mindless parroting of whatever PAP ministers said before.

Anonymous said...

To Anonymous 2/3/11 11:13.

If Lucky comes out he will be exposed to the LKY regime and they will target him day and night. Anyway, Lucky's pen is mightier than coming out. I think he has inspired many as of now.

Anonymous said...

PAP stands for Pay and Pay: ordinary Singaporeans pay and pay, and PAP elites receive more pay and pay.

Which part of PAP does anyone not understand???

Forget about the by-election strategy this time. It is trotted out by PAP now because they are frightened shit and Peeing in Pants. The Opposition should put up as many candidates whom they think are genuinely interested to serve the people. We will vote out all the pigs in the animal farm. Life in Singapore will get better in the long run without the lee-ches.

Alan Wong said...

Today one PAP MP argued against renting out those HDB blocks earmarked for en-bloc redevelopment to residents in the interim for fear that they will grow attached to the areas.

Instead of solving those who are in desperate need of rental flats, he is more concerned that they will grow attached to the residental neighbourhood.

Another pig-brained PAP MP we have here that prefers to rent it out to foreigners instead of citizens.

Do we need PAP MPs to give us stupid excuses like increasing GST to help the poor or not to rent them flats for fear they grow accustomed to the areas ?

Anonymous said...

If I were the PAP, I will not be too concerned whether cutting GST help or not help the poor.

I become concerned only:

-if the majority are poor.

-when the opposition becomes very strong and united.

-when foreign talents don't want to come here anymore.

-when Singapore is struck by an earthquake like the one in Christchurch. Or the sky falls on it.

-when Singaporeans become like the Tunisians, Egyptians and Libyans.

Since none of the above has happened or even likely to happen at all, if I were PM Lee, I will be the happiest PM in the world.

Anonymous said...

Alan Wong,

When I read that, I too was flabbergasted! This guy Cedric Foo is no small potato but his logic is really incomprehensible.

I read it over & over again and try to see the big or small picture of his statement and his following "more effective solution....", I really catch no ball. Oh, Singapore MPs, what have become of you ?

Anonymous said...

...pig-brained PAP MP....
-Alan Wong

..flabbergasted...
-Anon 2/3/11 13:39

So what??

Cedric Foo will be MP again, if he is still PAP candidate at the next election and PAP will again have 2/3 majority. At least 90% chance, I would say. And this is what really matters, isn't it?

Anonymous said...

Has anyone wonder why they remix the song 'HOME' sung by Kit Chan. It's not National Day, this is probably going to be the anthem for the coming GE.

Anonymous said...

I was at SingPost during lunch time. Guess what? A Chinese lady serves me. She took 10mins just to look for a plastic bag to place my purchases in. Even Post Office has to hire foreigners now.

Anonymous said...

"I was at SingPost during lunch time. Guess what? A Chinese lady serves me. She took 10mins just to look for a plastic bag to place my purchases in. Even Post Office has to hire foreigners now."
Anon 2/3/11 14:41

What matters is:
-SingPost may save quite a bit on wage costs because it is basically a service industry and this will improve their bottomline.

-whether 10 or 20 minutes, you still made your purchase. And will come back again if you need to buy more.

rookielim said...

Lucky,

The reason why the GST was originally implemented but in 1994 was to make sure that companies report the "true" revenue figures. Before GST, companies tends to under report their revenues and correspondingly their profits. After GST, companies have no choice but to report the actual and accurate revenue numbers because the GST on their invoice will become the input tax of their customers (which they can claim back from IRAS)... There is a natural cross checking done by the companies.

It make sense to implement the 3% GST back then as the corporate income tax (even though the rate may have been reduced) should in fact goes up when GST was implemented. I do not have the factual numbers to substantiate this.

However, this logic is no longer applicable when they raised the GST from 3% to 4 (33% from original 3% GST) to 5 (66% from original 3%) and then 7% (133%! Increase from original 3%).

Has PAP provided GST offset to the citizens every year? Have they provided 133% more (adjusted for inflation) GST offset package since they raised GST to 7%? How many poor people did not get their GST offset package for whatever reasons?

GST is a regressive tax, no ifs no buts. Only idiots would say otherwise.

If PAP kept it at 3% flat for all products and services, I support them to weed out the non-complying companies and to keep the tax system simple. But, ever since they increased it, there is no other good explanation than their incompetence in managing money (where has all the additional monies from the increase in GST over the years go to???) and greed.

Rookielim

Anonymous said...

"Has anyone wonder why they remix the song 'HOME' sung by Kit Chan. It's not National Day, this is probably going to be the anthem for the coming GE."
Anon 2/3/11 14:39

Actually, I'm not sure if this is backfiring on them. Everytime I hear it, it reinforces that Singapore is my home, so all the more I need to ensure I vote wisely for a goverment who cares for me, the average Singaporean.

DareToAct said...

Rookielim,
I'm not sure if it was true that they stsrted GST to get to the taxes bit even if it was, they soon realized that GST is a great revenue source and whenever they have a budget hole, raising GST is a natural answer. Same for COE. It was started as a stop gap measure to control vehicle numbers. The transport committee thought the best way to control road congestion was by taxing usage -- thus ERPs. But you can't start with ERPs before you have a ok public transport system. Of course, they realized how lucrative COE scheme is and so now we have both COE and ERPssssssss.

Anonymous said...

This is great blog that cover issues many singaporeans are not aware of. People ask smart questions here but are only read by those who are on your side to begin with. I hope you consider twitter and facebook to reach out to the broader audience who needs to be informed in an otherwise biased media.

Clear eyed said...

Until we rid our Parliament of the parasites and prostitutes now infesting it, the poor here will become poorer and be exploited even more. The coming election is our chance to do it.

Anonymous said...

This reminds me of a fickle woman who walks into a seedy club looking for a one night stand and, maybe if lucky enough, a life partner.
in this seedy clud, there is this stage. she is ursherd to the front of the stage where men will strut up the stage and flex their muscles. chee was first to go up. look, what muscles I have. then comes Ken. Hey, I talk like an English dog. Followed by goreng mee seng. He blasted, Pick me, everything cheap cheap. Ah low laughed. I am better, more down to earth, I understand your needs. Pick me for the night.
Then comes the big gun. The old man. He brushed all the rest aside. I am experience. With me, you will have an unforgettable night.
The horny woman looked at the choices in front of her.
Chee might kill me with his strength in bed. The English dog too calculative in bed. Low is too low. Goreng mee seng is an opportunist.
Ah, experience is what I need in bed for now.
But, the doors are opened. I am too horny to resist the rest.after all, the old man will die one day.
And there are no shortage of men i can sleep with in this club.

Short of calling her a prostitute, I think she is pretty lucky to have so many men vying for her love.

Anonymous said...

LOL

Anonymous said...

You forgot to mention Chum....he cannot make it. haaaaa

Anonymous said...

Hey, why r u guys talking abt chow charbo in Lucky's blog?

Pls, show some respdct.

Anyway, in the old laws, the unfaithful woman is stoned to death. The new way, kena caught. ...go and SIN no more or...venereal disease will attack your backside...hahaha

Anonymous said...

It is a good idea for the APs to ask for lower gst.
This will gain the support of the people.

Anonymous said...

They will be in for a rude shock this coming election. Even if marine parade or amk is contested. I am very sure they will be shocked by the outcome! They are living in their own worlds... they have failed miserably to understand the people and their needs. They are blinded by their own greed and glory...

Anonymous said...

"PAP MP : Cutting GST does not help the poor...."

Another warped logic from a PAP dog.

Anonymous said...

They just announced salary increase for civil service. Looks like they need the gst from the poor pauls to pay peters.
So they got the new citizens votes, papies, now cs and elites. Who else have they not bought out yet with our monies ?

Dirtyword said...

Another excellent article by Catherine lim! Whip whip!! She got all that tight angst out of my chest ..;-)

Anonymous said...

Better stuck to writing novels

Anonymous said...

The govt has all the figures and Deep Blue. Lucky has only the figures released and a smartphone. The former is a chess player, the latter a chess spectator.

Incidentally, Deep Blue kicked the ass of a grandmaster turned politician.

Deep Blue never retires, and sleep, and getting better with age.

Erm...Tell me where to send those flowers ok?

Anonymous said...

problem is that, they only have one deep blue.tsk tsk tsk

Anonymous said...

It might be a smart move.

APs should focus on possible lowering of the GST in the coming Electn to win people over. Esp for the essential goods should be lowered to 5% or 3%.

Anonymous said...

Lucky you are wrong this time.

Quality of Life for our rich and elite has indeed been improved over the last 4 years with all the new shining mall. 2IR and other luxury and high class recreation.

How can you say qualify of life has not been improved for this group of people in Singapore?

As for peasants like me, we are no longer in their big picture so who care? :(

Anonymous said...

Sometimes the more you read the papers (news), the more you get confused (angry??).

The budget can more than offset the prices increases for the next few years?? You believe???

Anonymous said...

Lucky, thank you for the piece, i am sure it awoken many Singaporeans from their slumber, and help them better decide at the polls. The day PAP (people u must distinguish between govt and political party, it's different) decided to gazette TOC for no good reason and tried to jail CSJ for an offense committed few years back, I know this ruling party is hopeless. The day the committee announce the redrawing of the electoral boundary, especially aljunied GRC where there is practically no change in population numbers, it furthers me and my friends resolve to make our vote count for true alternative representation in parliament. A ruling party that claimed to be world class and have the singaporeans support should not be afraid to face the oppositions directly without stooping so low with these despicable boundary moves.

Anonymous said...

Deep Blue? Too clever end up Deep Shit.

Anonymous said...

Incumbent stir shit, those waiting to get their hands on the jackpot stir shit. Chey, every 5 years, kena sai. Ha

Anonymous said...

I think the MP is right in saying cutting GST won't help the poor. How much money does a poor man spend on average every month anyway? How much would he end up saving? Will it amount to anything? The only beneficiaries of a lower or zero GST would be the middle class, who spend a significant sum regularly and also pay income tax.

There are other ways to help the poor, if one is really keen on it. But in Singapore.....

Anonymous said...

What is it about taxes that these people don't understand? Fxxxwits.

Kojakbt said...

Actually, the other way would be to cut Govt spending. By spending less, we will not need to tax the citizens with higher GST.

LHL said he had decided to raise GST from 3% to 5% (i.e., 2% raise) so that the Govt could get an additional S$1.3 billion of tax revenue per year (2003 prices).

We are slated to spend S$12 billion on defence this year, up from S$11.5 billion last year. In theory, if we cut about S$4.55 billion from defence, we don't even need to have any GST at all (i.e, GST 0%)!

By the way, even after cutting S$4.55 billion from our current S$12 billion defence budget, we are still spending S$7.45 billion. This is still a lot more than what Malaysia is spending - S$5.7 billion (source: SIPRI)!

Anonymous said...

The Hong Kong gov just showed the Singapore government what is a good and caring government!

Without GST, TV licence, ERPs and COE, they managed to accrued enough to give each Hong Konger SGD950!! No question asked. Here, the max is 800. Oh, and I dun think they are having an election soon.

Most importantly, Hong Kong's country is ran better!! Their public transport is better - taxis are cheaper and they can actually be foubd easily at low rates, trains comes every 2-3 minutes and they are not crowded and they are cheaper.

I also remember that HK and Singapore used to be neck to neck as far as the development of financial centre goes. Now we are so far behind our stock exchange needs to buy ASX to stay in the race.

Finally, the famed Singapore education system. Check out the rankings of Hong Kong's universtity. Their's are Top 10 in the world. Singapore's NUS and Nanyang were crazy happy to be ranked top 20-30 for their MBA program. HKUST is in the Top 10.

If you want real world class transport, financial centre and education, Hong Kong is the place that can offer you all of them. I think we should peg our Education, Transport and Finance Minister's salary to 90% of what their Hong Kong counterparts earn.

Anonymous said...

"""Without GST, TV licence, ERPs and COE, H.K. govt managed to accrued enough to give each Hong Konger SGD950!! No question asked. Here, the max is 800. Oh, and I dun think they are having an election soon."""

For those minibomd & structured notes victims, H. Kongers) also received much more than what the victims here received!!! Why??

Anonymous said...

You guys are barking up the wrong tree. There is only one thing you need to change, and the rests will fall into place.

But hey, it is your funeral :)

IncreaseGST2helpthepoor said...

The standard of living in this country has deteriorate over the last 7 years. Trains are overcrowded. Commuters are rushing so that they won't miss the train since the trains are packed to its brim.

MRTs are so packed that you can't even enjoy a national library storybook anymore because it's overly crammed. What's the point of having national libraries when you can't even find time to read and the only time you can find to read would be in your train rides and still you can't even such a thing?

Let me guess. Readership has increased from the national libraries but are Singaporeans borrowing them or are china, india and pinoys taking on memberships?

Singapore is becoming another Bangkok in southeast asia. Poor air and overcrowding.

See lah, these are the kind of leaders that we have.

Anonymous said...

//
If Lucky comes out he will be exposed to the LKY regime and they will target him day and night. Anyway, Lucky's pen is mightier than coming out. I think he has inspired many as of now.
//

Hey Mr Lucky ... remember the time you had to unceremoniously shut down your blog ... sorry cant resist ... 2 decent articles in succession ... must be a record for you ...

Anonymous said...

""Jobs, Jobs, Jobs....""

But after many (5?) years, many older people (Locals) still cannot find jobs. Any one interested at all???

silly said...

@lucky: you are doing a great job blogging issues that affect all of us. don't let the pap dogs affect you. some of these idiotic anony comments are probably written by brainless pap dogs. judging on the writing style, there's probably one person posting multi comments, pretending there are many who don't agree with your views.

kelvinli1974 said...

"If you total up loss of revenue from the corporate tax cuts and the tax cuts for highest income earnings, it is equal to the amount gained from the increase GST. This means that the poor who did not pay income tax had to fund the cuts for the rich through GST increases."

Thanks for the great write-up. Can you help me understand it a little further. I may be missing something.

How did you get the numbers above?

So if you lower GST say by 2%, it means that the rich save more money because they contribute to a majority of GST collected.

Understand your point about the poor pays more in quantum compared to the rich. Agree fully

But to supplement the lowering of GST, would be to increase personal and corporate taxes. Wouldn't that create less jobs which some of the poorer people will need?

And the middle income who contribute the second biggest amount to GST save money on GST but pay more for taxes. Wouldn't they get upset as well?

Sorry. Trying get my head around it. Can help?

Anonymous said...

Look at your PM. He is the man of the hour.

Will he do it?

Observer said...

The rich here do not need your shopping malls. They go overseas.
Its meant for the tourists

The rich here do not need your education system. They go overseas.
Its meant for people who wants to migrate from their home countires

The rich here do not need your food courts. They go overseas
Its meant for the foreigners.

The rich here do not need the MRT
they have their own cars & drivers
Its meant for the foreigners.

So what do they need? What is precious to them? What is here that meets their needs?

Anonymous said...

Going by recent events, the APs are very weak.
To help yrself to lower the costs
of living, to lower the gst for at least the essential goods, to lower yr pressure and stress in the jobs, you hv to help yrself before the APs can help u.

There are many good "Talents" now in APs, but it is rather diff for them to work together now. With more encouragement & support, the APs will be getting stronger & stronger. In time to come, they will be in a better posn to help u.

Kojakbt said...

Actually, the other way would be to cut Govt spending. By spending less, we will not need to tax the citizens with higher GST.

In fact, according to the 2011 Budget, the GST collection is estimated to be $8.4 billion. We are also slated to spend S$12 billion on defence this year, up from S$11.5 billion last year. So, in theory, if we cut $4.2 billion from defence, we will be able to reduce our GST tax by half from 7% to 3.5%!

And by the way, even after cutting $4.2 billion from our burgeoning defence expenditure, reducing it to $7.8 billion, we are still spending a lot more than Malaysia - they are only spending $5.7 billion according to the latest info from SIPRI.

Anonymous said...

Lucky - I think we shouldn't underestimate what the govt is doing or think that they don't know what they are doing.

Yes, GST is a regressive tax. It penalizes the poor and lower middle class more. The GST offset is one-off while the impact of GST introduction and GST increases are for life.

But that is exactly the intention. Tax everybody, so that the revenue collection is unnecessarily high - more than enough with budget surpluses. Then use the surplus during election time as carrots. No, I didn't say vote buying - just lots of cash goodies during election years. This is called "leverage". For the poor, the amount they received during election year is significant.

Anonymous said...

Yes, should definitely cut the cost of gov. First cut the pay, bonuses, pensions and free healthcare for ministers and senior civil servants. I also read somewhere (not sure where, so don't quote me) that 1 out of 10 in Singapore are directly hired by the gov. Are we too gov heavy?

silly said...

@kelvin1974: lowering of gst doesn't necessarily equate to rising of corp/personal taxes. Hong Kong's taxes are amongst the lowest in the world and yet they don't have vat. the govt will need to reduce spending and remove the warped logic of accumulating more and more reserves. incidentally HK has a relatively cheaper administration than spore and they don't boast of having a huge reserve

Anonymous said...

My classmate who is a hong kee is returning to Hogn Kong after he got fed up with our government's policies.

The only reason why the government keeps harping for a strong mandate in the last 2006 election is now clear. Clearer than the sun. They wanted to increase their salaries for millions and they didn't a two third majority in parliamnent not to oppose this.

Now, they have started to redraw the boundaries and gerry-mandering yet again. They want to be restored to parliament with another two third majority, so they can continue to keep their million-dollar lifestyles.

We are fools indeed.

Since the last election, inflation has gone up by 13% while salaries remain stagnant. BTO flats are 4 years long even when Mah Bow Tan says it's affordable and you can get your key in 3 years.

Houses are expensive and salaries are low. Orchard Road was flooded. Mas Selamat ran away. Transport went up. We have gst on essentials like rice and bread. Even water is taxed. MRTs and buses are overcrowded. Year in and year walkovers by the government. Many singaporeans are retrenched and can't find a job once they hit 40s. The cost of rearing a child has gone up. FOreigners are taking away our jobs and causing resale hdb COVs to rise.

So, let's vote them in for ore overcrowding and rising costs.

This time, let's not blame the government when things get worse. Singapore is going downhill after this 2011 elections.

Anonymous said...

think pap will still rule for another ten years or so cos we have very weak opposition and very weak minded people. hope this is not the outcome but i think a lot of people blinded by pap.

Anonymous said...

Dear Lucky

Don't come out to stand for election

Singaporeans very good at these kopitiam talks, but when it comes to action, it is all self interest. The votes still go back to PAP

For now, your powerful articles in your blog are good enough

Let's see the results of the coming election. i hope that the opposition should form at least 30%~40% of the 87 seats

Jeffrey Peter said...

The pap mps define the "poor" as the pap mps themselves. With their multimillion dollar salaries.

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This can't succeed as a matter of fact, that is exactly what I believe.

Anonymous said...

The PAP has always sought counsel from international businesses and business people. And to all these businesspeople, Singapore is a fairy tale place where all their wishes can come true (because they didn't, back in their own more socialist, more politicised countries). Now, the experiment is over. There is a reason many policies we practise aren't practised elsewhere, not only because they wld be just politically suicidal, but because the policies simply hurt real people.