GST fine the way it is, says Tharman

By Robin Chan
03/03/2011 (Thursday)

PARLIAMENT

Tweaking it to battle inflation will only benefit wealthy, says minister

Exempting or reducing GST on certain goods and services does not mean the savings will be passed on to the consumer, Mr Tharman says, adding that the administrative difficulty of having a multi-rate GST system can raise costs. -- ST PHOTO: NG SOR LUAN

FINANCE Minister Tharman Shanmugaratnam has dismissed calls by opposition MP Low Thia Khiang to cut the goods and services tax (GST) to 5 per cent or tweak it to alleviate the higher cost of living.

Mr Tharman said this is a wrong solution that will result in the Government giving more money back to the wealthy, while taking away from the poor.

Mr Low had raised the issue in Parliament on Monday, saying that inflation had taken a toll on the lower-income group.

He suggested that the Government consider cutting the GST from the current 7 per cent to 5 per cent and also exempting basic necessities from GST.

Rebutting the first suggestion, Mr Tharman said the bulk of GST is collected from higher-income groups and foreigners, so cutting the rate would benefit them more.

He said that based on 2010 collections, the bottom 20 per cent of Singaporean income earners contribute only about 4 per cent of all GST paid, while the bottom 60 per cent contribute roughly 16 per cent.


From: http://www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_640905.html