Pay and pay, eh?

When I went to university in Chicago in 1993, one of the first things I had to get used to that drove me nuts at first was calculating taxes. State and city taxes in metro Chicago added 7.75% to every bill at the time; in the suburb where my university was, it was fractionally cheaper at 7.5%. Singapore wasn't charging GST then, so even though I knew the concept existed, had dutifully studied it for my 'A' Level Economics exam and paid it out on previous vacations, it took some getting used to, the habit of adding a little extra to everything I bought, whether it was groceries or a new outfit, a Jimmy John's sub or a meal at a restaurant. Plus 7.75%/7.5% aren't the most intuitive numbers to calculate on the fly, which meant that I'd usually add 10% and round down from there to be on the safe side.

It did add to the cost of things. You couldn't just pick up something and forget about taxes if you were living on a budget. Even groceries, as I said, cost approximately 10% more.

By the time I got home to Singapore, GST had firmly ensconced itself here at 3%, which seemed laughably trivial in comparison, particular when state and provincial taxes could add up to 15% or more in countries like Canada. Singapore retailers and service providers took the helpful step of including GST in the prices they displayed on their price tags and restaurant menus, so that customers wouldn't be flustered by having to punch out 3% on tiny calculators whenever they were thinking about buying something. Or so the logic went. Instead, it felt like, yeah, prices had just shifted upwards slightly, but hey, whoever thought we were ever paying taxes when we were just paying the sticker price?

So now the Prime Minister wants to increase the GST from the 5% it's been since 2004 --- after rising to an intermediate 4% in 2003 because that was supposed to make the 5% mark more politically tenable --- to 7%. Why?

Our aim is to help the lower income groups and the elderly, not to increase their burdens. When we implement the GST increase, it's not just the GST increase, it's the package which will fully offset the impact of the GST increase and begin to strengthen the social safety nets and tilt the balance in favour of the low income groups - we will not just raise the GST but we will have a comprehensive offset package.

--- Prime Minister Lee Hsien Loong, November 13, 2006,
as quoted in the Channel NewsAsia report, "GST to be raised to 7%: PM Lee"

(Oddly enough, the Prime Minister's speech hasn't been punctually uploaded to Sprinter yet, even though the government is usually scrupulous with this sort of thing.)

I don't really have any problems with an increase in GST as long as my income tax rates go down. And while there hasn't been any mention of that yet (they're holding back details of the GST increase till the next Parliamentary Budget debate in February 2007), I admit that the news itself of an impending increase doesn't quite get my knickers in a twist. I've long accepted paying a GST as an inevitable corollary of living in a big city, even though it's surreal to think that I'm going to be paying as much in taxes here as I did in Chicago 13 years ago, and even though I know there's nowhere that any GST will go but up.

What does annoy me --- and this may just be my 'A' Level Economics talking, because anything more advanced always made my eyes glaze over --- is that the Prime Minister is explaining away the increase as an effort to help the government raise money to help "the lower income groups and the elderly".

You know what would help the poor and the elderly? Not raising a tax that they cannot avoid paying.

The reason governments, I think, like GSTs is because they get to collect taxes from actual consumption --- the logic being that if you've got the moolah to buy something, whether it's the weekly groceries or a Prada bag --- you ought to pay the government a little something since you obviously earned or otherwise acquired the money somehow to make that purchase. So it helps them to get around (partially) the problem of people who make heaps of money but under-declare their official income through wily legal acrobatics or other accounting shenanigans. Nothing makes governments --- Republican, Democrat, conservative, liberal, socialist, fascist, totalitarian --- gnash their teeth so much as knowing that people are getting away with not forking out their "rightful" amount in taxes. Maybe totalitarian governments can take it out a little better on people by lopping off their heads, but that's already after they've ground their teeth to bits in frustration.

Having a GST also has the serendipitous side-effect of making everyone pay taxes (not just the rich) and "spreading the tax burden out" among all members of the population. That includes, by the way, the poor and the elderly.

Everyone in Singapore pays GST --- at some point, somewhere or other (unless you do all your shopping from an establishment that makes less than S$1 million per year). Whether you're earning an income or taking a handout from someone else, whether you're five or fifty, whether you're buying groceries you need to feed your family or a Prada bag you "need" for the year-end Xmas party --- we're all paying GST. No one asks (or cares) at the check-out counter if the customer is, in fact, poor or elderly.

So unless our government is about to issue little cards certifying that the bearer falls into the poor or elderly group and therefore gets GST waived on all their purchases, I don't see how raising the GST is going to help more than hurt the people it's supposed to, well, help.

Besides, if the government wanted merely to raise money to help the poor and elderly, there's lots of things they could do. Reduce the Cabinet minister's salaries, for one. For another, stop prancing about on the world stage like a kid trying to get the judges' attention with the IMF/World Bank meetings or the Singapore Biennale, and spread some of that money out among social welfare programmes. (Note to anyone who works on government committees trying to "enhance" the country's standing through all these song-and-dance efforts: When you're cool, you'll automatically be invited to sit at the cool kids' table. When you're not cool, no amount of whinging and wayanging will make it happen, plus it has the effect of making you look even more uncool while you're at it. That's just the way the world works. Suck. It. Up.)

The Prime Minister's GST announcement was shored up by an immediate avowal to develop a "package which will fully offset the impact of the GST increase and begin to strengthen the social safety nets and tilt the balance in favour of the low income groups --- we will not just raise the GST but we will have a comprehensive offset package" (see quote above).

You know, one wouldn't need a "comprehensive offset package" if one simply didn't raise the GST. And one could still help the poor and elderly by devoting all of one's time and energies to figuring out how to help and finance the help for them, instead of worrying about how to raise the GST and make it politically palatable at the same time.

Plus I gotta really love the part where the Prime Minister declares, "I'm not going to tax 15% on income tax". I hear that Singapore does have some of the lowest taxes in the world for a developed country. I've never actually crunched numbers to verify this, but my friends in the US, Canada and the UK pay a lot more taxes on their income than I do.

So I'm sure anyone in Singapore who makes heaps of money is glad of the Prime Minister's statement, taken for what it's worth. Never mind that the rich (or "higher income" group, as our government loves to euphemise) are precisely the ones who have the cash (and some measure of social responsibility) to help the poor and the elderly. Never mind that to them, a 2% increase in GST --- or in anything, really --- is fairly negligible and unfelt. Never mind that they could still pay taxes on the order of what is levied in the US, Canada or the UK, and still keep a pretty good party going all year round.

Oh no, we have to keep the "higher income" group happy, so we're not going to tax 15% on income tax. Fantastic priorities we've got here.

The thing is, even if GST's here to stay, and whether it's 5% or 7%, I'm thinking there has to be better ways to make sure it doesn't hurt people who are just spending money in order to get by in life --- people who are buying their groceries and school textbooks and shoes and public transport fares. In the UK, there's no tax on books --- I assume, because the philosophy is that it's good to read (even *sigh* reading some book of the crappy Chicken Soup ilk) and there shouldn't be barriers to reading and learning. In Massachusetts and Oregon in the US, there's no tax on clothes, which makes factory outlet shopping all that much sweeter.

Surely there has be to a way, in our teensy-weensy country where we know all the stores there are and the poor aren't exactly shopping at Palais Renaissance or the Raffles Hotel Shopping Arcade, to spread the GST out even more evenly so that people aren't taxed when they're buying stuff they need to, y'know, survive. Forego taxes on groceries? Make books and clothes un-taxable? I don't know, but if the government is smart enough to figure out a "comprehensive offset package", it must be smart enough to figure out how to differentiate conspicuous consumption from necessary consumption --- if they were interested in doing so in the first place.

You know what would help above all and regardless of any changes, though? If all the retailers and businesses in Singapore charging GST started indicating it separately from their prices in all their stickers and receipts. Because then we'd know exactly how many dollars we're forking out to the government, and not the retailer, with every purchase we made. Because then businesses couldn't use a GST increase to merrily hike their prices and round them up to the nearest 10 cents, 10 bucks or $1,000, in order to disguise a convenient price increase on top of the GST increase. It would require consumers to think a little differently when they look at a pricetag or menu, but that's a small price to pay for knowing exactly how much The Man is taking away from you, with every little transaction you make.

Raise the GST. Don't raise the GST. Just have the balls to say why and how you're doing it, and stop trying to wave your socialist cred around because, frankly, we all know you ain't got any.

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