Tax Factoid Part 2:
In other countries, GST is a regressive tax but in Singapore, it is progressive.
How so?
In other countries, GST (VAT/sales tax) is charged for everyone like us but in different countries, different 'basic items' are exempted. This does not make the tax progressive as rich people consume basic items too - that is they also benefit from the exemptions.
In Singapore, GST is charged to everyone BUT the Government then gives GST rebates and credits to the people based on income/wealth. Well-to-do people get nothing.
So everyone pays a (low compared to every other developed country) GST, but only the poorer people get rebates. The rich don't get it.
In this way, our GST also becomes a progressive tax.
Brilliant isn't it?
Another interesting factoid for sharing.
Calvin Cheng
*Comment first appeared on https://www.facebook.com/calvinchengnmp/posts/867419963308081
Editor's Note:
A good rebuttal by another netizen on Calvin Cheng's comments:
Ryan Ong But rich people benefiting from tax exempt necessities does not equate to more money being available to the poor - it just means less money is available to the government. And if the point of the GST is to be a redistributive tax, then the system would *still* work if it became a luxury goods tax that funneled that money toward the poor.
The REAL genius behind the GST is that it allows the government to raise its revenue by raising the sales tax, rather than by raising the income tax - it is therefore less apparent to voters, and results in a higher degree of complicity. Also, by applying it to everyone in general, the rich do not feel especially targeted by meddlesome wealth redistribution methods. So yes, it IS brilliant; just - IMO - not for the reasons you mention.
You keep comparing us to other countries, but we can cherry pick however many examples we want - we're doing nothing but making ourselves feel better (and blowing smoke up the govt's. collective butt). The fact that it goes on in other countries doesn't mean it's good and should just be accepted, or that it changes the reality of what's going on - it's a form of taxation that's good for garnering votes, which is not illegal but deceitful. And it's not a reality we - or any of our ministers in particular - should be happy about. Live with it, maybe.