ELSON: If you’re middle-class, you’re likely to be hit the hardest by the government’s alternatives for raising taxes. When the government says it will do something, it will lah, so expect taxes in any of these forms to rise:
(1) Income Tax
Income tax is a progressive tax, which is good for most people because the rich get taxed more and the poor pay zero dollars in tax money (while getting government subsidies funded partly by money from the rich). So it’s essentially a Robin Hood tax (yes bro, S$800/month cleaner uncle no need pay income tax).
But will the government risk making Singapore less attractive by raising taxes for the rich who park their money in Singapore? I bet not, and I’ll wager 2 cans of Tiger if the government really does so and I’ve to eat my words.
It’s not going to happen.
But with so much emphasis on the welfare of the poor, seen in the gross amount of medical subsidies given at public hospitals and moves to increase salaries of low-wage jobs, do you think the government is going to increase their tax from S$0.00?
It’s not going to happen.
So it’ll likely be the middle class – those earning an average of about S$3000 a month, who are going to suffer big time if there’s any changes to the income tax rate.
And it’s looking increasingly likely that the government will find a way to work GST into the system.
If the government does find a way to implement tax on online purchases (like Britain does with its VAT system) then good luck to all you middle-income earners.
If a blanket tax (i.e on everything that you buy) is introduced, then you’re going to pay more for the games you download on your handphone, the “spree” items that you get as a way of saving money on atas products, and of course, all your Taobao stuff.
So every time middle-class folk think they’ve gotten a good buy, just remember that the government has gotten an even better deal – free money.
(3) Goods and Service Tax
And this brings us to GST – a rise from the current 7 percent? Perhaps. But GST is a regressive tax (because it’s not Robin Hood-like in nature) where the poor, sandwiched and rich all pay the same rate of tax.
And will the government raise GST? Maybe lah, because even a dog when desperate can leap over a high wall sometimes.
If GST does get raised, it’s really a re-distribution of wealth given the government’s huge spending on subsidies for the poor (eg hospital subsidies, housing subsidies, S&CC subsidies, education subsidies, etc).
Then you’re the middle-class, and you better be prepared for rising costs.