GST exemption - you've got to be joking!

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Monday, 20 February 2012

Singapore Democrats

For years the Singapore Democrats have been calling for the GST for basic foodstuff such as rice, oil and sugar as well as medicines to be abolished. This is because such a tax is regressive disproportionately hurting the poor. To make up for the loss in tax revenue, the SDP proposes that luxury items be taxed at 10 percent GST.

Finance Minister Tharman Shanmugaratnam did exempt certain items from the GST last Friday when he unveiled the Budget. He decided to remove the GST for gold and other precious metals!

The Minister started off by assuring that the Budget was aimed at creating a "fair system of taxes and benefits".

Then he declared: "Investment–grade gold and other precious metals are essentially financial assets that are actively traded and are just like other financial instruments that do not attract GST. I will therefore exempt them from GST."

The move, according to the Minister, is to facilitate the development of gold trading in Singapore. This would lure even more asset managers to Singapore in our frenzy to turn this island into a financial centre.

With wealth disparity getting bigger and bigger, the tax system should be adjusted to become fairer towards the poor. Many countries have removed the GST for basic necessities so that those at the bottom of the economic scale are not unduly burdened.

Everyone - from billionaires to the homeless - has to eat. A 7 percent tax on food affects someone earning $1,000 a month much more than it does his neighbour earning $10,000.

But despite evidence that demonstrates that removing the GST for essential items would significantly benefit the working-class and help level up society, the PAP has steadfastly refused to do so.

Instead, it chooses to abolish the GST for gold and other precious metals which only the rich are able to afford to deal in. Do rich people in Singapore look like they are in need of more help from the Government?

This is symptomatic of the policy direction of the PAP. It remains callous to needs of the people who most need state support while paying meticulous attention to the wants of those with wealth and power.

It is a Government that has lost all sense of decency.

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Comments (2)

Tue 21 Feb 2012 1:52 AM | Clear eyed

They have lost not just a sense of decency but their conscience and soul. That's why they can do the things they do without losing any sleep. They are no longer human.

Wed 22 Feb 2012 12:46 AM | Buwakasha

It is good that the SDP supports taxing luxury items, but can the SDP clarify what does luxury items mean and who decides what they are? The problem with this kind of stratified tax system lends itself to be corrupted because it allows politicians with the power to decide what is "luxury" item and what is not. Corporations can buy up politicians to make their products non-luxury items and their competitor's products luxury items thereby giving them a big advantage. A better system would just be a flat reduction in the overall tax rate. Just cut GST across the board, to 5% for example. In that way everyone benefits.

As for the SDP's comment about gold and precious metals which "only the rich are able to afford to deal in", I think the SDP is totally off-based and out of sync with reality. First of all, everyone trades gold, not just the rich. Second, the RICH do not pay GST when they trade in gold, only the poor and middle class people do. This is because of the investment instruments are different. If you use a mutual fund to buy investment instruments or other "sophisticated" vehicle, e.g. Gold futures or ETFs, there is no GST. However, if you go to the bank and save your money in gold, say you put in $100 in a gold savings account, you pay GST. So who do you think are likely to deposit their money in a gold savings account? The RICH or ordinary folks like you and me? I think the SDP should read up on the actual effect of PAP policy before criticizing them.