Singapore’s way of taxing GST is actually pretty smart
Hand and money staircase isolated on white
What if I told you that some Singaporeans actually don’t pay GST? In fact, the poorer you are…the less you spend, the higher the likelyhood that you don’t pay GST.
If you spend $1000 month, you’re paying about $840 in GST.
Each year the government gives citizens the GST Voucher packagewhich consists of: cash, utility rebates and Medisave top-ups. All this is worth up to $1750 (depending on your income and age). At its peak, a citizen receives more than the GST he/she has paid throughout the year.
This method of rebating the citizen is far better than the other option: not charging at all.
Some people say “oh, let’s not charge for essential items”. This framework creates two problems:
How do we determine what is an essential item in the first place? Is Internet access essential? Is a television essential? What about a mobile phone? Even if it is just rice and oil…, what brands are considered essential? This alone is an administrative nightmare.
After working out what essentials are, you then have another problem. Wealthy people get away with not paying GST. That’s a loss of many millions of dollars to the economy, money which could have gone into helping those who are needy.
That’s it – it is that simple.
If GST was collected alone, without any rebates (or transfers, as they are known in Government lingo)…then yes, you may call it a “regressive” tax. Or an unfair tax, because the poor are charged for it.
But Singapore has the rebate component, so the poor are not charged for it. The rich are paying their part to fund the overall national budget that pays for everything that happens in Singapore, including funding to help the poor.
The more you spend, the more you pay. So if you don’t want to pay GST, very simple – just spend less!