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26 Aug 2019
Movement for change
Suggestion View - 306
Suspend GST to stimulate the economy

I suggested that GST should be suspended to stimulate the economy to cope with the impending recession caused by disruption to global trade.

Some people think that it will not help, as most people will still not spend the GST saving due to economic uncertainty.

I disagree. 

When people have more disposable income, they will spend the additional income, mostly on domestic goods and services. This will stimulate the economy and create more business and jobs.

Many countries adopt this strategy to stimulate their economy. If the tax savings benefit the ordinary people, which is what happens when GST is suspended, a large part of the money will flow back into the economy.

When the savings goes to the wealthy people, such as a cut in the higher income tax bracket, the saving is not likely to be spent. They will add to the income of the wealthy people. 

The suspension of GST is easy to implement. It can be restored when the economy recovers. Alternatively, and it is my preferred approach, the suspension should be made permanent. If additional revenue is needed in the future, it can come from an increase in income tax for higher earners. 

Singapore is in an unique position. It collects significant revenue from land sale and vehicle taxes. It should be possible to suspend GST permanently, and may not require any increase in income tax.

This means that the government may not have sufficient finances for the large scale infrastructure projects. The large scale spending can be reduced through financial prudence. We can still have the needed infrastructure, but we should avoid spending too much money on these projects. We should look for more cost effective ways of building our infrastructure.

I hope that the general public will support this suggestion to suspend GST to stimulate the economy. If more people come out in support of it, we can collectively pass a strong message to the people in charge.

Tan Kin Lian

Vote - should we suspend GST to stimulate the economy?


 


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