Coping with GST hike & inflation: the PAP Govt’s promises delivered through multiple rounds of support

10/11/2022

S$3.56 billion — That’s the total amount of relief announced this year alone to help alleviate cost of living pressures.

  1. The S$560 million Household Support Package announced in this year’s Budget.
  2. S$1.5 billion support package in June.
  3. Another S$1.5 billion support package in October.

This doesn’t include the newly enhanced S$8 million Assurance Package to cushion the GST hike. More on this later.

A sign of a responsive Government?  Perhaps so.

But if you were to go deeper to the nuts and bolts of these packages, you will find a fair and empathetic Government who shields the vulnerable, and puts them front and centre in all policies.

Who benefits the most?

Three groups immediately come to mind: the lower-income, retirees and the sandwich class.

To lay it out in real terms,

  1. The bottom 40 per cent are fully shielded from inflation in 2022.
  2. The average retiree household’s increased expenditure is fully offset.
  3. The middle 20 per cent are covered for more than half of their increased expenditure due to inflation this year.

Providing such targeted help has been the hallmark of the Party since the get-go; the Party has always preferred the long-term view of uplifting the most vulnerable first over the implementation of short-term populist schemes (we will get there shortly).

A two-pronged approach

At this juncture, it’s timely to remind everyone that the S$3.56 billion support is only to fight cost of living pressures.

A separate slew of measures, namely the S$8 billion Assurance Package, which includes enhancements to the permanent GST Voucher scheme, are in place to cushion the impact of the planned GST increase.

If the S$8 billion figure seems new to you, that’s because Deputy Prime Minister Lawrence Wong announced a S$1.4 billion top up in Parliament on Nov 7.

He also said repeatedly the majority of Singapore households will not feel the impact of the increase for at least five years, while lower-income households will not feel the impact for about 10 years. 

In addition, seniors will receive additional cash payouts under the GST Voucher – Cash (Seniors’ Bonus) scheme.

In his op-ed for Petir.sg, DPM Wong wrote about the unique Singapore GST system.

“Our GST system is unique – we have the GST + the permanent GST Voucher scheme + the absorption of GST on publicly-subsidised healthcare and education by the Government. We have significantly enhanced the permanent GST Voucher scheme in this Budget.  For low-income households, the impact of the GST increase will be neutralised.”

This two-pronged approach tackles both cost of living pressures and planned GST hike in a way that is equitable; this Government has got you covered both ways.

What about that YOLO approach on GST hike?

Can we really afford to drive away large MNCs?  Can we rely on an implementation a wealth tax that only works on paper?

These are part of the Worker’s Party’s four lever strategy to offset the GST hike.   Unfortunately the numbers do not add up.  It is mathematically not possible.

No Government wants to raise taxes, it’s simply not popular and definitely not politically expedient.

Then it begs the question: Why raise the GST then?

We can take WP’s approach that is easier and sweeter, and we can live happily ever after, right?  Alas there’s no Hollywood ending here, if we allow this approach to happen, it will be the beginning of the end of Singapore.

No, it is reckless and a sign of weak governance that will lead to fiscal decay faster and whatever our forefathers built will be all for naught.

There’s a Chinese idiom that goes 今朝有酒今朝醉, which means to live in the moment and enjoy while one can. Or in millennial-speak: YOLO. This idiom sums up WP’s suggestion of using more from the reserves now. What’s the point of saving for the next generation?

Our Party’s suggestion can be summed up using another Chinese idiom: 未雨绸缪, or planning ahead and saving for a rainy day, which the PAP Government has put money where the mouth is. Remember DPM Heng Swee Keat’s multiple rounds of Budget during the height of the pandemic and the aforementioned multiple support packages announced by DPM Wong?

An investment

The tax revenue collected doesn’t go into the abyss; it gets channelled to mitigate the real and rising healthcare costs for a rapidly ageing Singapore and funding for future infrastructure spending.

It’s only the right and responsible thing for the PAP Government to do. Compared to the situation in other countries, we are already in a much better position and this is due to the nimbleness of the leadership and subsequent policies.

It’s not just a contribution to other Singaporeans but also to ourselves. And when the time comes for us to enjoy the fruits of our labour, we can be sure that, based on its track record, this Government will continue to do the right thing for us and Singapore.

Photo by Galen Crout on Unsplash