The Ministry of Finance yesterday (Jan 2) announced that 880,000 HDB households will receive GST vouchers between S$55 to S$95 for their utility bills this month (Jan). The utility rebates vouchers for utility rebate will cost the government only S$265 million in a year, or 0.56% of the S$47 billion GST revenue in 2017. Even with the cash voucher scheme that cost S$280 million in 2017, the payout to Singaporeans is only at 1.1% of the total GST payout.
According to government propaganda and ministers like Indranee Rajah in Dec, GST helps the poor. However, the only group directly helped by GST is the rich as income tax is correspondingly offset. With GST, foreign-sourced income are also not taxed in Singapore. For the poor, GST has only been proven to be regressive.
A low income Singaporean living off S$1,000 a month on expenses spends about S$840 in GST in a year. However, the following 3 GST schemes below shows that he will only receive S$627 in return for 2017:
GST Cash and Medisave – S$500 (maximum payout)
U-Save voucher – S$127 (maximum payout of S$380 divided by average household occupancy of 3)
For the unemployed and retirees, GST is a full tax on them as they are unable to enjoy any income tax rebate.
Prime Minister Lee Hsien Loong has earlier hinted of a GST increase, with the new GST hike expected to be announced during the Budget next month in February. State media Straits Times consulted GST hike supporters saying that 1% increase “might not worth the political effort”, and hinted that Lee Hsien Loong might increase GST to 9% or 10%.
For every 1% increase in GST, an average Singaporean on a S$2,000 monthly income is expected to pay S$400 more each year. Singapore is currently the world’s most expensive country, and cost of living is likely to be more burdensome in 2018 following a slew of tax increase announcements.