GST vouchers offset 90% for needy?

We refer to the article “Vouchers offset over 90% of GST paid by needy” (Straits Times, Apr 18).

GST voucher offset 90%?

It states that “For these households, regular GST vouchers offset about half the GST they pay, replied Mrs Teo. If the one-off GST voucher special payment announced in Budget 2013 is included, the benefits from the GST voucher scheme cover over 90 per cent of the GST paid, she added.”

We are somewhat puzzled by the above reply in Parliament. When the GST was effected and subsequently increased – Singaporeans were given the assurance that the lower-income would be given offsets for the GST – so that they will not be worse off.

However, the reply now says that the “regular GST vouchers offset about half the GST they pay”. So, needy households may have to depend on the special one-off GST voucher special payment in order to get a bigger offset, on an uncertain year-to-year basis.

And even with the special payment – the total offset only came up to 90%?

Shouldn’t it be 100% as promised?

Other forms of GST rebate?

As to “She also stressed that the GST voucher scheme is not the only form of rebate on the GST paid by lower-income households.

“The GST voucher is part of a progressive system of taxes and benefits that ensures that lower income households get back far more benefits than the taxes they pay, including GST,” said Mrs Teo.

“These include childcare subsidies, financial assistance from school till tertiary education, workfare, special and additional housing grants, and healthcare subsidies. The GST that they pay is hence far more than offset by the benefits they receive.”

– These financial assistance may not be received by every needy person or family, every year. Thus, many may end up worse off without the full GST offset in certain years.

Also, how can special and additional housing be considered as GST offsets – when these are not cash that can be used? Similarly, how can financial assistance for schooling and healthcare subsidies be deemed as GST offsets, as these are also not in cash?

Moreover, even healthcare fees for Class C and B2 keep rising above normal inflation, which healthcare subsidies may not catch up with – such that the needy always have to pay increasingly more.

As to workfare, the bulk of the payment goes to CPF. So, how can it be deemed as a GST offset?

Amount is too embarrassing – is it?

How much do Singaporeans get in real hard cash – the GSTV Cash and GSTV Special Payment?

Maximum cash payout is $500?

Well, the highest amount that you can get no matter how poor you are is $500 ($250 GSTV and $250 GSTV Special Payment) for Singaporeans age 21 and above with annual income not more than $24,000 and living in homes of annual value not over $21,000.

cash voucher

Some get $200 or almost nothing?

If your annual income is not more than $24,000, but your home value is between $13,001 to $21,000, you only get $200, instead of $500.

Can offset GST meh?

So, the bottom line is that no matter how poor you are – such as a low-income couple with 2 children below age 21 – will only get $1,000 ($500 x 2 adults) of real hard cash that they can use to offset the 7 % GST.

For a low-income family of say 4 persons who spends about $18,000 ($1,260 gst)  a year ($1,500 a month), how much help is the maximum cash gst vouchers of $1,000 going to help, against the relentless rise in the cost of living and near zero real median wage growth for the 20th percentile income, in the last decade or so.

Up to $3,000 benefits?

I recall receiving in the mail, a booklet “For A Better Singapore : What Budget 2013 means for you and your family”.

It states “How these benefits* add up :

  • Retiree couple living in 3-room HDB flat will receive $3,000 in benefits, of which $1,400 is in Medisave.
  • Middle-income family living in 4-room HDB flat will receive $1,500 in benefits

* This includes the regular GST Voucher, one-off GST Voucher, Special Payment, S&CC rebates, CPF Medisave Top-up and tax savings”

So, what does the above really mean to you?

Well, if you are not an elderly (“retiree couple”) – you don’t get any Medisave top-up.

In other words, your total benefits may be about $1,400 less, i.e. only $1,600.

Medisave is not cash?

With regard to “Its benefits are given out in cash, Medisave top-ups and utility rebates”

– Are Medisave top-ups like disposable cash that you can use to offset the GST that you pay?

By the way, MediShield premiums and deductibles were increased substantially from 1 March, not to mention the ever rising healthcare costs.  (“MediShield: Deductibles increased by 5 times historically for elderly?“, Nov 12, 2012)

S & CC increased?

You get some S&CC rebates – but S&CC  rates have been increased by all the town councils. (“Each town council different, but raise charges together?”, Oct 3, 2012)

Notably, Aljunied Hougang Town Council was the only town council which reduced fees after the last General Election, but have recently increased it too.

In respect of “””It exists as part of a broader set of benefits that are provided to different households.

It is within this context that the GST scheme is designed, so we look at the benefits that are provided to households holistically”, she said”.

Tax savings?

– As to “tax savings”, We understand that about 60% of the people do not or hardly pay any income tax. (“HDB rentals up 10%, but property tax up 118%?“, Nov 27, 2012)

So, how many and what percentage of those who live in say 3-room HDB flats paid any taxes, and how much taxes? Tax savings may tend to help the rich more than the poor.

Utilities increased?

With regard to U-Save rebates of $360 to $520 depending on flat type – perhaps you just have to compare how much your utilities bills has been increasing over the years? (“Malaysiakini: Shedding light on S’pore’s power tariff hikes“, Jan 8, 2011)

Higher CPF contribution is good for you?

In respect of “Higher CPF contribution rates for low-wage workers from 2014 – For a 45-year old part-timer earning $700 a month

His employer contribution rate

9.9%   →    16%

His employee contribution rate

13.7%   →  17.1%

Can you imagine how poor and cash-strapped you may be earning just $700 a month.  And now you net take-home pay is further reduced by 3.4% by $23.80, from $604 to $580.

So, are you really better off?

600,000 don’t get any cash?

In 2012, the media reported that 2.1 million Singaporeans would get GST vouchers (“2.1 million Singaporeans to receive GST Vouchers”, Asiaone, Jun 30, 2012).

Last year’s media reports say that 2 million adult Singaporeans will get letters from the Government about their benefits – 1.4 million Singaporeans will get GST-Cash.

So, does it mean that 600,000 people don’t get any cash – get only non-cash voucher like Medisave?

Does it mean that the proportion of cash to non-cash has declined since the GST Offset was first implemented? (“GST Offset much lower now for lower-income? “, Dec 31, 2012)

In this connection, according to a Ministry of Finance (MOF) press release on 6 December 2010 – “By end October 2010, 2.4 million or 97% of eligible Singaporeans had signed up”.

Eligible Singaporeans decreased from 2.4 to 2m?

So, why is it that the number of adult Singaporeans who qualify for GST credits has decreased from 2.4 million in 2010 to 2 million now?

How small is small number? And why deny them?

According to a MOF press release on 17 June 2009 – “As with previous years, MOF is engaging grassroots leaders so that they can help reach out to the elderly and low-income Singaporeans, including visiting them to help them sign up for their GST Credits. So far, 97% of those living in 1-3 room HDB flats have signed up”.

The MOF’s subsequent press release on 7 December 2012 – “Reminder To Sign Up For GST Voucher By 31 December 2012″ continues to say “We have enlisted the help of grassroots leaders to visit households to help them sign up for their payouts”, but no longer gives any statistics as to how many have still not signed-up yet (like in the previous years as quoted above).

With regard to “However, a small number of eligible Singaporeans who have not signed up for a previous Government payout (such as the GSTV in 2012 or the 2011 Growth Dividend) will need to do so in the next two weeks to receive the payout by August 1 (2013).

Singaporeans have until December 31, 2013 to sign up to receive the benefits”, how many exactly is the number of “a small number of eligible Singaporeans” who may be denied their GST offset package because they did not sign up by the deadline?

Always say spend more to help the poor means more taxes?

In the final analysis, we seem to keep saying that “but some suggestions may mean heavier tax burden on younger Singaporeans” (Our Singaporean Conversation Dialogue: Ideas to help seniors unlock flats’ value”, Straits Times, Jun 14) – but we do not appear to be spending more in totality to help the lower-income.

GST increased to help the poor? 

When GST was increased from 5 to 7%, the primary reason given was to help the poor.

To-date with the additional GST revenue of about $2 billion a year (estimate), there has not been a full accounting as to how these additional revenue has been used to help the poor, comparing annual spending before the GST increase and spending now?

SY Lee and Leong Sze Hian


About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.