Thursday, November 16, 2006

GST mystery

One of the Sammyboy forummer pointed out one discrepency of my earlier article on GST. The 5% GST in Singapore generated only $3.6 billion instead of the optimum theoretical $7 billion from our GDP of $150billion.

I double checked on Ministry of Finance website and I have found some interesting fact: the difference in tax base between Income/Corporate tax and GST is only 26%. And the fact that the effectiveness of GST is only half of what it should be, it may mean that the tax itself will be more regressive than initially thought. This is due to the fact that only the rich corporates and individuals could avoid spending in Singapore or save more. Although we have forced savings as in CPF, but most people spent part or even all of their CPF on housing and healthcare.

The following is my reply to the forummer:


Dear thisalsocan,

I have searched for the budget 2006 figures and I got the figures from the following link:

Ministry of Finance 2006 Budget Highlights

It seems strange to me that by simple calcuation, the tax base for both GST and Income Tax only differ by 26%. i.e. Income & Corporate Tax: for each 1% generate $556 million, 1% GST generate $702 million.

This could mean that GST is only half "efficiency" than it is supposed to be. i.e. the value add tax only manage to tax on half of the GDP instead of the whole.

This may be due to a few facts mainly: forced saving in terms of CPF (some part of CPF may be spent in terms of healthcare or housing) and also huge savings by corporates and rich families which may be transferred overseas. i.e. as long as they don't consume in Singapore, they are not taxed by GST.

What does this mean? GST is more regressive than we first thought! For most of the families earning less, they would spend most of their income with little savings. Even for their CPF, they may have to spend on housing and healthcare. Thus, the 50% of GDP that manage to "escape" GST taxation would come mostly from wealthy corporates and families.

Goh Meng Seng

19 comments:

Anonymous said...

so fast another article it further proved tht GMS is very quick "on the move". On the move to another issue so tth pple will forget abt his and chia dismissal from WP. may I congrats Mr Goh to come up with such a smart move but sporeans r not blind they knew ur motive jus as they knew WP is out to bankrupt spore thru welfare state.

Anonymous said...

mr 5.32pm anonymous,

don't repeat, people read already also want to zzzzzzzzz

Anonymous said...

That's right. So what if he is sack or quit on his own. He no longer a party member peroid. How does it affect Singaporeans as a whole. You mean to tell me that no one has ever been sack or quit from PAP, SDP, SDA etc.

Don't YOU throw smoke and divert attention from issues that are currently affecting the lives of ALL Singaporeans. Give me numbers that show his methods will one day bankrupt Singapore. If he did give any numbers or figures. Did he mentioned in any way that he is out to create a welfare state.

Anonymous said...

this is the art of argumentatum ad nauseum by anon 5.32pm who is wolong123...just keep repeating the same phrases like 'welfare bankrupting the state' so as to avoid discussing the issues fully. Notice he never responds to lucid sensible points of view. Just attack...attack...attack. Much like what Joseph Goebbels did with the Jews.

Anonymous said...

Once again GMS dare NOT lok at all these criticisms directly but merely sending his "hatchetmen" to do the dirty job while he looked away.

Anonymous said...

Once again PAP dogs are snaping away here, attacking on pychological and emotional front.

Anonymous said...

Once again the WP's guard of defenders are snaping away here, attacking on annoymous that cursed GMS. Er, please lah, cursing GMS doesn't mean they are PAP dogs, okay?

Anonymous said...

"WP's guard of defenders" sounds too nice a term for them why not call them "LOYAL WP DEFENDING DOGS" ?

Anonymous said...

Hahahahahaha!

Anonymous said...

GMS is condemned in Singapore politics forever, even WP, a low class party doesn't want him. He can only resort to writing bullshit here with no impact at all

hahahaha

timotei said...

Goh Meng Seng wrote:

"One of the Sammyboy forummer pointed out one discrepency of my earlier article on GST. The 5% GST in Singapore generated only $3.6 billion instead of the optimum theoretical $7 billion from our GDP of $150billion."

Doesn't this assume that all of GDP is domestically consumed? GDP is the market value of "all final goods and services produced", but they don't need to be consumed domestically. Goods produced for export would not be subject to GST.

Anonymous said...

GMS,

Dun give up! we will always support you! Rejoin WP! Give people a choice again!

Anonymous said...

see?
even u resigned from wp already pple still want to attack u n wp.
so what for resign?

Anonymous said...

You want to be a politician, you have to be very thick skin. Look at Mathatir, Badawi, Chen Sui Bain, LKY, GCT, etc. They don't simply resign just 'cos they face criticisms. You have to be able to take it on the chin sometimes. So ask yourself. Do you have what it takes? If not, it is of no use if you set up your own think centre, etc 'cos there always will be criticism irregardless whether you are right or wrong.

Anonymous said...

I hope peopel would not simply dismissed it as a mere resignation. Whats under still waters r strong currents, a "mere resignation" in WP terms is sacking. GMS admitted beeing old and useless he was pushed out of nEAC to CAC.

Anonymous said...

"Resignation" is only a nice word to plaster over the cracks within WP and to save face for both LTK and GMS:

1. LTK can claim that the party is united and there are no dirty politics behind GMS quitting.

2. GMS quitted on his own accord, not sacked by WP.

But if you read the ST report on LTK's views on the internet mudslinging, it is obvious he doesn't think too highly of GMS's forays in SBF.

Anonymous said...

Yes this is not mere resignation. There really is more to it. We must get to the bottom of this. Absolutely!!! EErrr....hmmm... btw what is it we are digging up here? If we solve whatever it is, I hope it can get the Govt to cancel the 2% raise in GST.

Can?

Anonymous said...

Being sacked from WP still have face to put WP's logo here.

Mr Goh, WP has SACKED you, you understand English?

Anonymous said...

They sack him, they sack him not, they sack him, they sack him not, they sack him, they sack him not,.......

Hey presto!! GST is down from 5% to 3%. Jeez, it doesn't work? We continue again?