Wednesday, November 15, 2006
Increase in GST. Any Difference For Me?
After having a little bit of time to think about the increase in GST to 7%, I got to thinking how this may possibly affect me.
First of all, let's assume a 100% no change in spending habits on my part. That's a flat 2% increase in expenditure (or a 40% increase in GST expenditure).
Of course, one can change spending habits, but there are somethings that you simply cannot do without. Like rice. So we end up with a bunch of stuff we simply must spend money on, absolute necessities. I will call this the expenditure floor.
The expenditure floor should be about the same for every single person, regardless of the amount of money they earn. In this respect, who will end up worse for wear in a tax increase? I am not sure if the absolute necessities are currently exempt from GST but it's an idea that's tinkering around. After all, those who are well off could not possibly gain much from a GST exemption on these items but it could well make a difference to someone who is strapped for cash.
On a $500 expenditure, the increase will come up to $10, enough for 4 packets of chicken rice.
Of course, good things for low income people are promised on the back of this increase, but I would rather not be the recipient of these goodies (because of the financial implications) and thus I do not expect to benefit much from these plans.
I guess we have to wait till February next year to see how this all pans out and how it will benefit low income people more when it is implemented.
0 Adorations
After having a little bit of time to think about the increase in GST to 7%, I got to thinking how this may possibly affect me.
First of all, let's assume a 100% no change in spending habits on my part. That's a flat 2% increase in expenditure (or a 40% increase in GST expenditure).
Of course, one can change spending habits, but there are somethings that you simply cannot do without. Like rice. So we end up with a bunch of stuff we simply must spend money on, absolute necessities. I will call this the expenditure floor.
The expenditure floor should be about the same for every single person, regardless of the amount of money they earn. In this respect, who will end up worse for wear in a tax increase? I am not sure if the absolute necessities are currently exempt from GST but it's an idea that's tinkering around. After all, those who are well off could not possibly gain much from a GST exemption on these items but it could well make a difference to someone who is strapped for cash.
On a $500 expenditure, the increase will come up to $10, enough for 4 packets of chicken rice.
Of course, good things for low income people are promised on the back of this increase, but I would rather not be the recipient of these goodies (because of the financial implications) and thus I do not expect to benefit much from these plans.
I guess we have to wait till February next year to see how this all pans out and how it will benefit low income people more when it is implemented.
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