The government collects $10 billion in GST each year and has a surplus of $30 billion in the budget, according to IMF accounting conventions.
They can remove the GST totally and still have a fairly healthy budget surplus of $20 billion.
Removal of GST totally will reduce the cost of living by at least 7% and could be more, if the saving in accounting and administration for GST and GST vouchers is considered. This will bring immediate relief to an economy that is heavily strained with high business cost, and a people that is suffering from high cost of living.
If public expenditure increases in the future, income tax can be increased. The current collection from income tax is $20 billion. If the full $10 billion has to be increased, the income tax will increased from the current level by 50%.
Most working people pays an income tax of less than 10% on their marginal income, so the increase could be 5% (on the marginal income) and it is still lower than the saving of 7% on GST (on the total income).
The high income earners, and the million dollar ministers may suffer a hit, but their top rate of tax is 20%, so their max increase is only 10%. What is wrong with paying 30% tax when they earn $1 million or more?
Let me give this call to the hard working and hard pressed citizens of Singapore. Do not believe the rubbish that GST is good for the people. It is only good for the million dollar earners.
Tan Kin Lian
*The writer blogs at http://tankinlian.blogspot.com/