Photo of Indranee Rajah

Fending off criticisms over the regressive tax increase, Senior Minister of State for Finance and Law Indranee Rajah said at a state media radio interview that a GST exemption on essential food items is not needed as it benefits the rich more than the poor because “the rich can eat more rice”. The PAP Minister even sarcastically questioned what colour of rice does Singaporeans want to have GST-exempted:

“Let’s just take rice, for example. Rice is eaten by not only the low income, but also the high income. So if let’s say we exempt rice, then you’re also exempting the high income from paying GST on rice. And then, do you say you’ll have GST only on white rice and not on brown rice? How about organic rice? So, firstly, it’s going to be very difficult to administer. But if you say you’ll exempt all rice, actually, given that the higher income are the ones who can afford to buy more, they are likely to benefit more.”

In other countries, GST is exempted on essential food items to reduce the impact on the low income. Singapore exempts GST only on gold ingots investment purchase.

The PAP Minister also defended the rich and opposed wealth taxes like estate duty and luxury tax. Minister Indranee Rajah said that the rich don’t spend enough on luxurious items to generate “the kind of revenue to support healthcare”:

“There are only so many handbags you can buy, only so many watches you can buy, only so many people who can afford those. So, you wouldn’t be able to get the kind of revenue that you do need to support healthcare, infrastructure, security, education. The second thing is that it’s also going to impact the retailers here, retailing those luxury goods … We decided at the end of the day, it’s not going to bring in a huge amount of revenue that would do what we needed to do, and that’s the reason why we have not put it in.”

Minister Indranee Rajah also said in the interview that a GST increase is “sustainable” for the poor “in the long run”:

“The increase in goods and services tax (GST) was not the only option considered for raising revenue, but it is the most sustainable source of income over the long-term. There are a few other things we have explored as well … But GST is the one that will give you, over the long term, a sustained revenue of sufficient amount that will take care of our expenditure needs, for healthcare, infrastructure, security and education.”