
After the budget was announced, I read the Chinese newspaper, Zaobao and I see what I expected: Front page flashed with reports on how good the budget is for the "poor".
The focal point is naturally of course on the amount of money poor people will get from the government OVER A PERIOD OF 5 YEARS. Nothing was mentioned about the "NEW POOR", neither was there a comparison made about pre-GST hike vs post-GST hike, how much each income group will be taxed or rather, how much more they will pay as taxes.
Instead, I have found an interesting post in Sammyboy forum on the net amount of taxes each income group will pay pre as well as post GST hike, accompanied by the reduced in income tax rate. No prize for guessing who will pay more after the increase in GST accompanied by the reduction in income tax. As long as your percentage of income are spent in local economy is HIGH, you will be affected more by the GST hike. On the other hand, as long as you did not reach the income bracket that allows you to enjoy the tax cut, you will not enjoy a bit on the benefits of income tax cut. The worst case is that you cannot enjoy the income tax cut but most of your income are spent in local economy, you will find that the amount of taxes you pay will increase tremendously in percentage terms. This normally happens to the middle class income earners and it means a bigger middle class squeeze.
While the really poor will get some sweets from the government and the rich and wealthy corporates enjoys income tax cuts, who will pay for the goodies given to the poor and the "savings" that is given to the rich and corporates? Someone will have to pay for this, surely! Of course, it will be the New Poor, middle class Singaporeans.
When I take a closer look at the so call "goodies" handled out by the government, it seems that they have tried very hard to make it look "impressive". $1000 over 5 years means only $200 per year. And most of these goodies go into CPF.
Now the problem is this, if the money is put into CPF, it is difficult for you to enjoy real benefits in terms on the freedom of usage of these monies. Furthermore, nobody really knows (hey, even PAP ministers don't even know or plan for GST hikes, how could we know? ;)) whether there will be more GST hikes in future or not. The longer the money is kept in CPF, the more likelihood that it will face higher GST in future when you take it out to spend them. This means that the purchasing power of the $100 given to you now may not worth $100 in future if GST continues to hike in future! Even when you are old and retired from working life, you cannot escape the claws of GST until the day you die! You thought that you could forget about paying income tax to the government when you are unemployed or retired? Nope, that will not be the case. Even when you are dead, your family will have to pay GST for your coffin as well as your funeral!
The sad fact is that once you are born in Singapore and remains in Singapore, from the very first day of your birth, you are taxed until you die, through GST. When your parents buys diapers for you, they will be taxed. When they buy milk powder for you, they are taxed. So, how do that add up to the little goodies that the government are giving to you for ONLY THE NEXT FIVE YEARS while you will have to continue to pay the 7% GST for the rest of your life?
This is what policy packaging is all about. In order to divert the attention of the true bitterness of the GST hike, they will try to make stories out of the goodies they are giving out now and hope that you will forget the blunt truth that you will be taxed a higher GST for the rest of your life. Let's concentrate on what you are going to get in the short term first, never mind the long term pain that you will be facing in future.
If Singaporeans cannot see through such smoke screen of goodies to get the single most important message that GST is about Life Long taxation regardless of whether you are alive, dead, rich or poor, then the middle class will face a bigger squeeze ultimately.
Goh Meng Seng





