It was not so long ago we were told the Goods and Services Tax (GST) is not regressive. Never mind what the economics books say. Singapore's GST was first introduced on April 1, 1994, at 3%. It was increased to 4% on 1 January 2003, 5% on 1 January 2004, and 7% on 1 July 2007. Then in 2008, Transport Minister Raymond Lim went the extent of making a vile veiled threat of a further 1.5% hike, "You want the GST to go up to 8.5 per cent, to run a completely free bus and MRT system?”
Speaking at a Channel NewsAsia forum in March 2012, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam still maintained that "most of the taxes are paid by those who are better off and the benefits are received by those less well off." The new permanent GST voucher was introduced in that year to supposedly offset the 7 per cent GST that the lower half of retiree households pay on their expenses.
GST plus vouchers is not regressive. All too soon, the electorate will blame the apparent change on their faulty memories — they must have forgotten the two important words.
This year's GST voucher will not help everybody. Retirees staying in, not renting out, homes with annual value exceeding $21,000 will not be receiving the check. Retirees with zero income will still have to pay GST for goods and services purchased, including the water consumption component in the utilities bill, which is already subject to a hefty 30% Water Conservation Tax. Even if they switch off lights, wash at public toilets, and resort to a free smoke by opening windows to the haze from Sumatra, last we heard, the Mandai Columbarium still charges GST.