It’s finally here. 9% GST. The IRAS website proudly states that the Assurance Package will cover additional GST expenses for 5-10 years. This is not the case, and here is why.
Calculations on Paper
Perhaps the government’s math goes something like this:
1. In order to spend $800 on 1% GST, a household would have to spend $80,000 in a year.
2. To spend $80,000 in a year, the household would have to spend about $6,500 in a month.
On paper, this seems a highly reasonable calculation. Surely low-income households don’t spend $6,6667 in a month?
Calculations in Real Life
Say a plate of chicken rice cost $4. If the price increases by 1%, the actual price should now be $4.04.
But instead what’s a more likely increase? 20 cents? 40 cents? Let’s say it’s now $4.30, a likely increment in hawker prices. That’s actually a 7.5% increase in price.
This means the $800 Assurance Package will only cover $900 of spending a month. Far from enough in a normal spending year.
Let’s not forget those who need a car, like large families and those who work in multiple locations or ulu locations. Or those with other big ticket purchases, like couples looking to do house renovations.
Means What?
We must acknowledge that a 1% GST increase on paper translates to a far larger increase in real life. And when the chicken farmers increase price, the chicken distributors increase price, and then your chicken rice uncle increases his prices. How can you blame them for 10 cents each? More needs to be done to help the lower-income groups to cope with the increased costs of living.
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