Well, its some time after the GST increase bomb was dropped and there are plenty of good articles out there discussing the issue at hand. Just had to distinguish them from those "non-constructive criticism" posts that the government hate. Points like "GST is a regressive tax that robs poor Peter to give back to poor Peter" had been discussed extensively. Now how would GST affect poor Peter? Here's some simple considerations.

1.) Big Items
2% may seem little figure wish but if you are buying some big items (cost wise) it is a considerable amount. A $50 000 car with 5% gst is $52 500 while 7% gst is $53 500. A whole $1 000 extra in terms of tax. And if you take a car loan for 5 years with 2.5% interest that will be another $125 extra in interest that you need to pay. Now $1125 is like more than the income tax payable for many families in Singapore in a year. ($40 000 per annum taxable income translate to $900 of income tax)

Now keep your fingers crossed if you are buying a house with 30 year loans and expensive renovation. Or getting married with bridal packages that goes up to $8 000 and hotel receptions that costs up to $20 000. Or University education that can cost more than $20 000, or that medical bill for an operation blah blah blah...

2.) Small items
Imagine a small bakery in Singapore, they order their ingredients like flour etc from some distributor in Singapore. In order to deliver the ingredients to your neighbourhood bakery, they would have to pay for 7% gst for the transport (in terms of fuel and/or vehicles). When they sell those ingredients to the bakery, they have to include 7% gst again. Finally when you buy your bread from your neighbourhood bakery, there is another 7% gst to be factored in again. Granted that you don't add the taxes to get 21% but I won't be surprised to find 10-15% extra in prices.

Someone have to bear all the taxes incurred on the way and that someone would include poor Peter.

Increasing GST is equivalent to increasing the taxes of the average Joe and cutting income tax would benefit the rich more than poor Peter. Increase in GST may solve some problems in making Singapore more competitive but it in turns create more problems for many Singaporeans. And how would the government tackle these problems would make or break their trust in younger voters like me more than the fact that they blog or hip-hopped.

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