Everyone's unhappy about GST 9%. But is our GST really that high? Let's take a look at the data from around the world. Those in the green section are our Southeast Asia neighbours, the light grey section includes other East Asian comparisons, and the dark grey section shows some Western comparisons. Finland in particular was included as it is a small successful country known for having high levels of happiness.
Country | GST/VAT/Consumer Tax |
Malaysia | 10% |
Indonesia | 11% |
Thailand | 10% |
Vietnam | 10% |
Japan | 10% |
Korea | 10% |
Taiwan | 5% |
Hong Kong | 0% |
China | 13% |
Australia | 10% |
UK | 20% |
Finland | 24% |
Source: compiled from Wise.com |
After compiling consumer tax rates from other countries, we felt a bit better about it all. Because nothing helps to make us happier than seeing other people suffering also. Among the comparisons, only Taiwan and Hong Kong have lower tax rates. Everyone else is higher at 10% onwards.
However, we should also note that some countries such as China have a reduced GST rate for certain items, e.g. hotels, restaurants, transport and logistics (9% GST), and financial services and IT (6% GST). UK also has a reduced rate for some health products and fuel (5%) and food, books, and clothes for children (0%). This may be a possible approach that Singapore can pursue.
So... Singapore's GST is low?
Actually, yes. Still, that does not excuse the fact that the lower-income groups have it tough, and the middle-income groups are feeling the pinch as well. As important as it is to keep GST low, the more important question is: What returns are we getting for our higher GST?
Government expenditure will inevitably increase, because the government is subject to the same increasing costs of living that citizens are experiencing. But if the government is just passing on these costs to citizens through higher GST, then we should complain.
Instead, the government needs to continue leading and driving productivity changes. For example, the push for nationwide cashless payments and Singpass login created greater convenience all around Singapore. Increased GST revenue needs to be spent and invested wisely to create greater returns for citizens.
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