Ministry of Finance Most urgent change in govt policy
I asked a question in the Wisdom of the Crowd website - which issue needs the most urgent attention.

43 people voted. The top choice (44%) was to abolish GST. The other choices - in order of popularity - are the lower health care cost, stop immigration, allow CPF withdrawal at 55 and reduce defense spending.

I wish to explain my interpretation of the findings.

a) It is clear that the cost of living was the biggest concern of Singaporeans.  They felt that abolishing GST was the best way to bring down the cost of living. 

b) GST affects everybody and increases the cost of goods and services. Apart from the actual tax collected by govt, the cost of invoicing, collecting and accounting for GST that is added to the cost of doing business and is ultimately paid by consumers.

c) There is the multiplier effect. As the cost increases, each merchant in the supply gain adds a margin to their cost. The cumulative effect can be quite high.

d) Some people still opted to reduce GST, rather than to abolish GST. They felt that the govt still need the revenue. These people have not studied the budget to the detail that I had. I found that the revenue of $11 billion from GST can be covered just by counting the sale of land as revenue (as recommended by IMF standards) or by excluding development expenditure from the budget (i.e. it can be covered by sale of land).

e) If additional revenue is needed in the future, we can increase the rate of income tax payable by high income earners. We do not need a low income tax rate to attract wealthy foreigners to live in Singapore. They do not pay any tax on their foreign income anyway. The high income earners, including our ministers, can and should pay more income tax, for the privilege of earning a high income in the friendly business environment in Singapore.

e) I opt for a total abolishing of GST to have the biggest impact on reducing the cost of living. I bring this analogy. If a woman wants to have a baby, she has to be pregnant. She cannot have a child by being half pregnant. 

Singapore is now suffering from high cost of living. It is the highest in the world for several years. The high cost leads to other problems - international uncompetitiveness, insecurity of jobs for locals, high level of stress and suicide.

We have to reduce the cost of living. We have to take the bold step of abolishing GST.  

Tan Kin Lian



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