Updated: December 27, 2006 20 08 hrs
Goods & Services Tax

I am committed to seeing a flexible GST policy, whereby each citizen will contribute accordingly to their level of prosperity and progress in society.

I recognize the intrinsic problems faced by the Singapore society in the next 10 to 30 years, of which the yawning income gap between the rich and the poor and an aging population are of my top priorities.

Thus, from my perspective, the implementation of GST is a sound one as it provides the government with the financial resources to strengthen the existing social welfare programmes already in place, thereby enhancing the social safety nets to assist the low-income groups, with the intention to close the widening income gap.

Furthermore, financial resources are needed to conduct medical research and development, to build health care infrastructures, and to finance the increasingly costly medical bills of Singaporeans.

In the light of all these, it is crucial that the government receives healthy levels of revenues through the implementation of GST.

I support the notion of implementing a GST policy with a rate of between 3 to 10% and reject the call to abolish/ waiver GST on basic necessities. Basic necessities as well as luxury items should be taxed.

However, I beg to differ from the government proposal to keep GST at 7% across the board.



My Beliefs

Goods and Services Tax tend to be regressive in nature, more so if the bulk of the indirect taxes are on basic necessities. This will adversely affect the attempt to redistribute income more equally between the rich and the poor. However, if indirect taxes are imposed substantially on luxuries goods or goods which constitute more of a want than a need, then they are progressive in nature.

Increases to the Goods and Services Tax may be inflationary as well. They add on to the prices of goods and services, which may then spark off a wage spiral, and hence cost-push inflation. In the light of rising international oil prices, this will increase the financial burden on the lower-income groups, further eroding their spending power and subsequently affecting their standard of living.

Moreover, as the Singapore population ages, fewer people will be working to support an increasingly aging population. To reduce the tax burden of the working adults, a flexible indirect tax system is required.

Social safety nets and/ or welfare programmes aren’t really effective in assisting the lower-income groups on a permanent basis. More often than not, it is the lower-income groups that are bearing a large proportion of the tax burden.




My Proposals

1. To adopt a flexible GST structure. I propose a tax structure whereby both basic necessities and luxury goods will be taxed.

2. I, however propose that all basic necessities will be taxed at a rate of 3% while keeping the tax rate for luxury items at a consistent rate of 7% as proposed by the government.

3. What constituted a basic necessity and what does not will be determined by a special panel made up of government ministers, representatives from the various political parties, welfare help-groups, and more importantly, the general public.

4. In order to cope with the possible fall in revenue that the government might face in implementing 2 different tax rates, I also would like to see the government raising the tax rate for cigarettes and alcohol consumption to offset the impact of implementing a 3% tax rate on basic necessities.

5. This is in line with the inclusive society that the government has in mind as such a flexible tax structure alleviates the burden of the lower-income groups on a daily basis and at the same time, providing increased financial resources to assist the lower-income groups, thereby, reducing the widening income gap in Singapore society. More importantly, it provides an effective, feasible and long term solution to the income gap problem faced by the Singapore society.

6. All in all, each citizen contributes to the national coffers on a fair, equal and distributive basis, according to their financial status and needs in the economy.


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