How To Govern: Facebook User Brilliantly explains Reason Behind Increase in GST

Like most of you, my first thought when I saw that there is an increase in GST by 2% was

I simply do not understand why do they have to increase the GST. Do they not have a budget surplus? Are goods and services not expensive enough? Are they using citizens’ money to pay Ministers absurd salary???

Among all my anguish and anger, I saw a brave soul that stood up for us. A Whatsapp message that sums up all our thoughts towards Budget 2018.

Source: itahanyouverylongalready

But then, a Facebook User by the name of Aloysius Lau provided a whole new insight. His arguments are so well crafted and supported that I am actually swayed to his side of the argument. Increase in GST is definitely needed!

Since his responses are a bit long, I will do a quick summary of his answers to the 6 questions above:

1. Why is the government still raising the GST if we had a budget surplus of almost $10 billion last year?

The surplus last year is a fiscal surplus and not a structural surplus. Meaning, it is not a surplus you will expect every year. If you simply have a COE system in place, the same as any other year, and you get more income last year just because people bid higher and higher, it’s unpredictable and hence unreliable.

2. Why give $300 only to take it away in the long run with a GST increase?

Would you rather be given nothing at all? Furthermore, the rich will be the one experiencing greater impact when they are purchasing all the big-ticket items. When they buy a $1,000 good, which they will, they will need to pay $20 more.

For those earning less than $1000 per month, and assuming you spend it all, the increment from 7% to 9% will mean you pay about $20 per month. Average out 30 days, you probably pay less than 70 cents every day.

3. Is our tax money used for constructing infrastructures to accommodate foreigners?

Investors invest in an economy when they see a growing/wealthy population to spend. Hence for the invested business to make money, a stable/adequate workforce, a reliable infrastructure, a safe and stable environment is needed.

Should we cut back spending, investors will leave and Singaporeans will lose their jobs. So no, the tax money is also used for Singaporeans.

4. Why does Singapore spend more on defence than on healthcare?

One of the key success behind Singapore is to be able to provide a safe and stable environment for people to live in and businesses to operate in. Singapore does have many potential aggressive neighbours who are always ready to pounce on us.

In the past, we’ve been coping well with our healthcare budget even though it’s expensive. But as we expect an ageing population and hence higher healthcare expenditure, we need more money, meaning an increase in GST

5. Why do Singapore government provide better fundings for foreign students in their University Education?

Most scholarships require these foreign scholars to work at least 3 years in Singapore. This buys us a chance that they will stay behind and grow their roots, improving the population.

Scholarships are for the students excelling academically. The government does not take away the scholarships for locals and give it to foreigners. There are many locals who do not cherish their education enough to deserve a full scholarship.

6. Why can’t we reduce Ministers’ income instead?

First, CEO’s of big firms in Singapore earn more than the PM. If we don’t pay our ministers well, we end up with a situation where most the capable people enter the private sector, leaving insufficient talented people to lead the country. There is also the concern of corruption as they will be easily tempted.

Source: Daily Express

Well, that was somewhat a poor summary of Aloysius Lau’s wonderfully crafted response. You can read more about his response here.

 

GST will be up by 2%, to 9% starting 2021

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