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26 Feb 2019  (1292 Views) 
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Ministry of Finance


Budget 2019 - possible to abolish GST
I searched the MOF website for details of the revenue and expenses for Budget 2019.

I found many colorful charts and figures showing how the government is taking care of the needs of various groups of people.  Here is an example.

I searched for the actual figures on the revenue and expenses. I wanted to see if it is possible to abolish GST and still present a healthy financial statement.

I finally managed to find this pdf document. Click here. Yes, it is boring figures, but it contains the hard facts.

Here are the key figures extracting from the boring pdf

 
                            billion
Total revenue $74.90
of which GST $11.69
Revenue, excl GST $63.21
   
Total operating expenditure $60.79
Total development expenditure $19.47
   
Special transfers $15.30
Net investment return contribution $17.17

The total revenue projected for 2019 is $74.90 billion. It includes GST of $11.69 billion. If GST is excluded, the revenue will reduce to $63.21 billion.

This reduced figure is more than sufficient to cover the total operating expenditure of $60.79 billion. It will still leave a surplus of $2.42 billion. The operating expenditure include the large sums that are being spent on defense, education and health care. It may be possible for these expenses to be reduced through better financial control. However, I will not dwell on this matter now.

There is a development expenditure of $19.47 billion. This expenditure can be financed from land sale. At present, land sale (estimated to be between $10 to $25 billion a year goes straight into the national reserves). The International Monetary Fund has recommended that it should be counted as revenue. If this is accounted, it can be used to pay the development expenditure.

Some of the development expenditure could be financed by borrowings. The finance minister has hinted that this approach may have to be taken. I agree.

We do have two special items - special transfers of $15.30 billion and net investment income contribution of $17.17 billion. 

The special transfers of $15.30 billion is a questionable practice. It is money that comes from revenue. If the special transfers are excluded, there is no need to impose a heavy tax burden on the people (in the form of GST and other taxes).

The net investment income contribution is also a "strange figure". It is probably unique to Singapore. Rather than have this "strange figure", I prefer to take the land sale as revenue. It is more transparent.

My study clearly shows that GST can be abolished totally. It should be abolished to bring down the cost of living to the people. The rate of GST is 7% but the cost incurred by business to administer the GST will also be added to calculate the impact on the cost of living.

There is also room to increase the corporate tax and income tax on high income earners. We do not need to have very low tax rate to attract high income earners to come to Singapore. They do not pay any tax on their overseas income anyway.

Our high income earners in Singapore can, and should pay a higher rate of tax to help the lower income people and reduce the inequality in Singapore.

At present, there does not seem to be any need to increase the corporate and personal income tax rates as it is possible to abolish GST without these increases. This approach can be deferred to the future, if the need should arise.

I hope that you find my presentation to be clearer. It is less confusing that the presentation made by the finance minister.

Please vote if you agree with my suggestion that GST can be abolished.

Tan Kin Lian


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