Informative, she's quite neutral, but on sensitive issues, she's
quite defensive.
First she talks about 3G - Globalization, Gap (widening income gap)
and GST.
Globalization
First, she acknowledges that globalization has been around all the
time. Westerners moved to Asia to look for spices, raw materials,
etc. Easterners moved around the globe to look for better
opportunities. That's the past.
In today's world, it's in the sense of culture, information.
Culture as in globalization opens up lots of opportunities,
bringing in people from different countries and their cultures. In
terms of information, we are exchanging more information than ever
via the Internet.
Gap
With globalization, it not only opens up the world of opportunities
to us, but also to the world. MNCs relocate their production
centres to cheaper countries such as India and China, tap on top
local talent to manage the regional activities.
This forces manual, labour-intensive jobs salaries to go lower as
China and India counterparts can do more with lesser pay. But this
is the reverse for local talents. MNCs hire them because we know
the region well, can speak English and are hardworking. This pushes
their salaries up, which causes the widening incoming gap.
GST
This part is interesting and I almost got brainwashed. 
She talks about how GST is linked to globalization. You will never
realize this link. It's got to do with corporate taxes. Due to
globalization, the world has become a more competitive place to
live in. To attract companies here, we have to lower corporate
taxes.
However, lower corporate taxes means lesser revenue. So where do
they make it up? GST.
This is where I nearly fell for the trap. I was there thinking, if
something goes down, something must go up. I agreed with her.
But the more she goes on, the more I disagree. The Q&A session
actually reveals why they increase the GST, thanks to one student
who quoted a 13th century economic theory.
The theory goes something like this: if increased taxes affects
necessities, it will reduce revenues as citizens won't be motivated
to spend. (I think so, I don't understand what the heck the student
is saying, he's stumbling over his words)
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.
Continued in the next post...
