GST in Singapore

(A) the introduction :-

1.On the recommendation of the 1986 Economic Committee, Singapore 's government decided that it needed to shift from direct to indirect taxes, in order to maintain its international competitiveness in attracting investments.

2.GST was implemented at a single rate of 3% on 1 April 1994, with an assurance that it would not be raised for at least five years.

(B) the implementation:-

1.Being a tax on consumption, and not on income, the tax

2. system inherently encourages savings and investments instead of consumption. The tax system has a self-policing mechanism that discourages tax evasion.

3. to cushion the impact of GST on Singaporean households, an offset package,more fully described in schedule hereinunder (hereinafter called the schedule 1), was also introduced.

4.gst is taxable @7% wef 1st july 2007

(C) the opposition:-

1.The government argued that the offset package would help the majority of Singaporeans offset their increased GST costs for several years.

2.The government also argued that the Workfare Income Supplement, a wage subsidy, would provide significant support for low-income workers on a continuing basis even after the GST offsets have been distributed.              

3.The Committee Against GST Profiteering (CAP) was set up in 1994 to investigate complaints and feedback on profiteering or unjustified price increases using GST increases as an excuse.

4.Some critics consider GST to be a regressive tax, meaning the poor pay more, as a percentage of their income, than the rich.

(NOTE-To maintain the progressive nature of total taxes on individuals, Singapore reduced income tax on lower income-earners, as well as instituted direct transfer payments to lower-income groups, resulting in an overall lower tax burden for most Singaporean households.)

5.Some critics contend that basic essentials such as food and healthcare should be made exempt from GST, in order to help lower-income households.

(NOTE-5.1 Economic Restructuring Committee argued that having such exemptions would actually help the high-income more than poorer Singaporeans, because well-off households usually spend much more on essentials than a low-income household                              

5.2 If essentials were to be exempted from GST, there would be a need to make up for the revenue shortfall through a higher GST rate on other goods and services, which lower-income households would also have to bear.)

Schedule 1

1.The offset package consisted of :-
   1.1 direct transfer benefits, in the form of cash payouts (GST credits, growth dividends, senior citizens' bonuses)
   1.2 CPF top-ups (post-secondary education account top-ups for students, Medisave top-ups for older Singaporeans) ; and ;
   1.3 rebates (on utilities and public housing service & conservancy charges)

2.Those who earned less or lived in smaller homes received more benefits.