The thing about GST - Part II

Quote from Channelnewsasia(15Nov06):

SINGAPORE: The reason for the proposed rise in Goods and Services Tax (GST) is to help lower income groups and to grow the economy.

Defence Minister Teo Chee Hean said the purpose of having GST is to direct more resources towards lower-income groups.

He said the goal is to make the economy grow and the government can do that by having flexibility in setting the rates of taxes.

"We also want to make sure the economy grows and we have the flexibility to be able to reduce company taxes and personal income taxes to encourage more people to be more innovative and to create businesses," Mr Teo said.

"With a good growing economy, we will be able to deal with the increases that may come with the increases of 2 percent in GST. The lower-income group is really our target group and we want to look after them." - CNA/so

The rise in GST is to help the lower income groups? Wait wait, read more: "to make sure the economy grows, we have the flexibility to reduce company taxes and personal income taxes"

Increase GST, help the poor
Decrease Company and Personal Income tax, help the economy

Bullshit

Economics, simply, is much more complicated than i can truly explain, so i shall skip the information and arguements on regressive tax etc..

Budget, is the gahmen spending in order to fulfill its various functions daily. So in order to increase spending, gahmen must increase revenue. Gahmen's main source of revenue are taxes.


Now lets see, with a need to increase spending to help the poor, where will the money come from? Increase GST from 5% to 7% then.. sound arguement

However, what diss me off is the fact that they are talking about reducing Income Tax and company tax too. Soon, the leaders and elites will start saying things like this is necessary measure to make Singapore competitive, for businesses to grow, to grow the economy.

Therefore, to me, the system looks like this:

Revenue:
Comes from higher GST that EVERYONE must pay
A, who earns $100, buys $10 worth of rice, paying $0.07 cents of GST.
That's 0.070% of A's income to the GST
B, who earns $500, buys $10 worht of rice, paying $0.07cents of GST.
That's 0.014% of B's income
C, who earns $1000, buys $10 worht of rice, paying $0.07 cents of GST.
That's 0.007% of his income
A can be you and me, earning about $1000-$2000 monthly
C? They are earning about 10times our pay, which is $10,000 to $20,000 a month
Who are these? Directors, Senior Managers, and yes, most of them are our MPs and Ministers


The rich pays less of his income on necesscities such as rice

Expenses:
Lower revenue from Income Taxes
Lower revenue from Company Taxes
Higher Spending on to "help the poor"

Income tax, poor people don't need to pay, because they are often non-taxable. The middle to middle-low income pay less than the high income, so a reduction will benefit who?
Company tax affects company profits, shareholders, bosses, must be happy to hear this

The only good thing is the gahmen is finally making more effort to help the poor, but to get them to help co-pay for their offset package? This is dumb. Poor people are poor, and therefore unhappy. But by making them pay more so as to get a short-term offset? They hate it more.

So, is it not correct to say that GST was increase to cushion the plans to reduce Company and Income Tax, oh, and by the way, spend more money on the poor so they will see that increase in GST is for their own good.

Ah boy ah, you must pay more school fees so that the school can teach you how to earn money ok? so that next time when school want to increase fees again, you will not have problem.

Our Gahmen is taking the Robin Hood spirit, "robbing"(GST) the poor to "give them back the money"(offset packages)

Oxymoronic spin






Now, we are paying for our Progress package