I cut & paste:
apologies to ndmmxiaomayi for doing that but its for ease of
writing.
*************
And our dear minister's answer:
Reduced taxes doesn't mean increased revenues. Rather, it means a
reduction in budget. Take for example corporate taxes. From 35% to
30%, it's a 5% drop, which is a lot, considering that corporations
do earn a decent amount.
Now, how does the GST impact? Consider a worker earning $5000. The
GST increase probably only reduced his monthly savings. At the
most, his spendings will eat into his savings.
Now look at a worker who earns $1000. Already, he doesn't have much
savings, he has to tighten his budget and spend within the $1000 he
earns. With GST help package, it actually gives $300 to $400 to his
monthly spendings. (I'm very confused on this part, don't ask
me)
From the above two paragraphs, it seems like the government has
made a very bad assumption, it assumes that citizens will still
spend as usual.
Then she answered on the GST increase. Why isn't there a system
like luxury tax, necessities tax, etc?
Her argument is because it blurs the lines. What defines a
luxurious good? What defines a necessity? What defines this? What
defines that?
Generally, while one would agree that names like Gucci, Prada are
luxurious goods, how about goods like Nokia, Samsung? They are so
common. Should they be classified as luxury goods? Or just normal
goods? Another common sense answer is what is luxurious to you may
not be luxurious to another.
So the government decided to apply the increase across the
board.
She gave examples on Ireland and England.
Next question is about the top civil servants' salaries
increase.
This answer is damn zai. I like. Again, it relates to
globalization. And the yada yada reasons, so they benchmark
themselves against the private sector and gave themselves the
increase.
Also reminded the crowd that during bad economical period, they had
taken a pay decrease, with no changes within the past 6 years. So
this year's increase sort of justified it.
++++++++++++
I am not sure if any of the government ppl is reading this forum
but I am sure they do.
Firstly I don't understand the logic: a worker earning S$1,000 will
have $300 to $400 to his spending? The GsT offset package gives a
yearly S$300 - S$400 ? That spells out to $33 per month. Is the
government saying that with increment of GST by 2%, an average chap
earning S$1000 a month is facing only an increment of spending of
S$33 & this is aptly covered by GST offset package?
Has the government factor in the cost increae for staples,
neccessities, utilities ? Its a domino effect, you increase GST,
all other items will see an increase due to GST. You telephone,
internet, water, electricity bills all will see an increase of 2%.
Your groceries, medical bills will also see an increae of 2%.
Unlike merchants who can claim back the GST, we as consumer cannot.
Notice I have kept the examples to the essentials - I don't include
travel or luxury goods because as a poor man, you are not supposed
to have them.
I think the issue of luxury good tax is simple - we cannot levy
luxury tax not because we cannot define them - simply because we
cannot offend the luxury companies, imagine your Chanel, Christian
Dior, your LV all decided to get out of the country, we are
screwed. Moreover, we build on being a shopping paradise for luxury
goods, the PRs won't spend, the tais tais won't spend here. to levy
luxury goods tax is akin to driving the rich and FTs overseas to
make the purchase. Now the tourists are not affected because they
can claim back the tax but not local.
I think the question still remains - if the objective is to help
the poor - is raising the GST the only means? Its akin to robbing
Peter to help Paul.
