Increased GST needed to support rising expenditures

[bic_cherry]

Real or Fake excuse?


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Increased GST needed to support rising expenditures
A receipt indicating the cost of GST.

A receipt indicating the cost of GST.PHOTO: THE BUSINESS TIMES
PUBLISHED 15 July 2019.

We thank Mr Marcus Aw Chen Feng for his views on Singapore's tax system (Drawbacks to raising GST, July 8).

The increase in the goods and services tax (GST) rate some time from 2021 to 2025 will help to support rising expenditures to care for an ageing population, to invest in early childhood education, and to keep Singapore safe from rising security threats like terrorism. The GST collected will support public spending that benefits Singaporeans, in the form of social support and security spending so that we can better care for, develop and protect our people.

To address the impact of GST, in particular on lower-income households, we will continue to fully absorb GST on subsidised education and subsidised healthcare. We will continue with and enhance the current GST Voucher scheme when the GST is raised, to defray costs for lower-income households and seniors.


We are focused on ensuring that Singapore's overall system of taxes and transfers, comprising subsidies and grants from the Government, remains equitable. Lower-income households receive more transfers from the Government than all the taxes they pay, while the better-off pay more taxes than the transfers they receive. Concurrently, we have been actively tapping progressive taxes, as suggested by Mr Aw.

We announced the increase in personal income tax rates for higher-income earners in 2015, and increased buyer's stamp duties for higher-value residential properties last year.

Mr Aw noted that high tax rates may adversely affect economic growth and investments. Like value-added taxes and goods and services taxes in most countries, GST is applied on domestic consumption. We allow businesses to claim GST incurred on their purchases. As such, GST does not discourage savings, work and investments. Our system of taxes and transfers strikes a balance to help Singapore maintain its competitiveness globally, and we will continue to review and refine it.

Lim Yuin Chien

Director, Corporate Communications

Ministry of Finance

https://www.straitstimes.com/forum/...sed-gst-needed-to-support-rising-expenditures

 

[bic_cherry]

Drawbacks to raising GST
A receipt indicating the cost of GST.

A receipt indicating the cost of GST.PHOTO: THE BUSINESS TIMES
PUBLISHED: JUL 8, 2019, 2:32 AM SGT

The goods and services tax is set to rise to 9 per cent between 2021 and 2025.

Raising taxes means higher prices for consumer goods, including necessities such as rice, salt and sugar. This will adversely affect the spending power of lower-income residents. They will have less disposable income for other expenditures and may become unhappy.

High tax rates can negatively affect economic growth. The cost of production will increase for firms, making them less willing and able to invest in their businesses. They may even cut back on production, resulting in unemployment.


Moreover, the increased cost will deter foreign firms from investing in Singapore, resulting in the loss of job opportunities.

To combat inequality, progressive taxes can be used instead, so the rich get taxed instead of the poor.

Marcus Aw Chen Feng, 21

Undergraduate Year 1
https://www.straitstimes.com/forum/letters-in-print/drawbacks-to-raising-gst