GOPAPGOPAPGOPAP ...

Now why won't the GOP learn something from the PAP ? Or was it the other way round ?

Diary of a Singaporean Mind : PAP MP : " Cutting GST does not help the poor ..."

You know how far down the standard of debate has fallen when an MP stands up and argues that cutting the GST does not help the poor. GST is a regressive tax that penalises the poor the most because they spend most of their income. If you're Wee Cho Yaw or Peter Lim you spend maybe 2% of your income and invest the rest, so you pay 0.0014% of your income in GST. Why was GST implemented? Before our income gap ballooned to what it is today, the PAP govt openly admitted that the purpose of GST is to cut corporate tax and the income tax of high income earners. This is seen from the 2003 budget statement by the then Finance Minister Lee Hsien Loong:

"4.3 From YA 2003, I have decided to cut the corporate income tax rate from 24.5% to 22%. This 10% reduction will save businesses $700 million a year.

4.4 Also with effect from YA 2003, the top marginal personal income tax rate will be cut from 26% to 22%, with corresponding cuts in all income bands. This will reduce the tax payable by most taxpayers by 13% to 16%, saving them $620 million every year.

4.5 I have decided to raise the GST rate from 3% to 5% from 1 Jan 2003. The increase in GST is expected to raise an additional $1.3 billion of tax revenue per year."

If you total up loss of revenue from the corporate tax cuts and the tax cuts for highest income earnings, it is equal to the amount gained from the increase GST. This means that the poor who did not pay income tax had to fund the cuts for the rich through GST increases. In 2007, many Singaporeans became concerned about the income gap and the poor among us, the govt used this as the reason for GST hike ("gst hike to help the poor"). As they do this, they slashed corporate taxes again by 2%, that alone would take away more than half the amount raised by the increase

in GST....so before any help got to the poor more than half the GST hike went to fund corporate tax cuts[Link]. To date we have not seen govt figures of how much help eventually got to the poor - according to Leong Sze Hian ..not much[Link].

What I'm very sure of is our poor are worse off today than they were before the 2007 GST hike. The combination of rising cost of living and stagnant wages means much more needs to be done. If you look at the escalation in the cost of medical care, housing, transport, utilities and food, they simply overwhelm the meager help from the govt. We are all frustrated with govt dithering, bogus intentions and dubious arguments - Tharman actually came up with numbers to show the govt helped the "generous subsidies"[Link]. The true measure of whether the poor are really getting sufficient help is their quality of life...has it improved in the past 4 years? Find me a person who dares to say "yes" and I'll show you he's a liar!

02 March 2011