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Worst timed GST increase our policy makers could possibly make

Given current high inflation trends,this has to be the least needed, worst timed GST increase our policy makers could possibly make.

First we have a structural fiscal surplus of around $30 bn ++ while the GST increase will raise $ 3bn ++ revenue; so this 2% GST increase is currently arithmetically completely unnecessary.

Second, this structural surplus is growing strongly over the next decade because of our huge persistent balance of payments surpluses which are swelling our reserves and fiscal resources even further. This is the reason we had to set up GIC in the first place !

So what’s the point or hurry in raising GST, given we don’t even seem to be bold enough to come up with any decent social spending programs to use even a significant part of existing fiscal surpluses yet ?

Third, the GST increase will unnecessarily exacerbate inflation and greatly increase hardship especially for the bottom 20% who are most hit by food and energy inflation. GST vouchers and subsidies are now being nullified by overall inflation.

So why do policymakers insist on doing it ?

Why not admit, as Keynes did, “ when the facts change I change my mind “? We need that kind of policy flexibility and humility to deal with these uncertain times. It’s not too late to change this extremely inappropriate policy.

Instead, more urgent policy attention should be given to supporting the incomes of the bottom 20% working poor and elderly poor in a more sustainable way than one off handouts that kick the underlying cost of living poverty problem down the road.

So why not do this as a start ?

We really need to ask our policy makers these hard, serious questions !

 

Yeoh Lam Keong

 

 

yyy
READER COMMENTS BELOW

10 Responses to “Worst timed GST increase our policy makers could possibly make”

  • Harder Truths:

    There are two types of inflation – supply side (cost-push) and demand side (demand-pull). Cost-push inflation is when there is a scarcity of basic goods and services and the problem is from external supply chains, like now. Demand-pull inflation is when consumer demand exceeds supply and is an internal consumer demand issue chasing after items; this is not happening now.

    Cost push inflation cannot be influenced by removing money from people’s pockets. Prices of essential goods and services are from external factors. People not having enough money because of GST only means more people cannot afford basic goods and services, and will not reduce inflation.

    Only demand – pull inflation can be controlled by increasing GST. If people have less to spend and therefore spend less, then inflation goes down because demand goes down.

    The Regime does not want to spend the Reserves because they grow the economy via debt. The GST increase forces people to go into more debt by borrowing more from banks and financial institutions to meet their basic needs. This helps the debt houses but creates a nation of slaves who own nothing but have to repay debt just to survive. People are just debt slaves in a rentier economy.

    Do not think the Regime is stupid. They know what they are doing. And they know how to squeeze the last from of blood from your body.

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  • Inoowatosay:

    Mr Yeoh is not a nobody. He was Singapore Chief Economist before. Mr Yeoh, I have followed you closely in the past. Don’t just post on social media. Hard times require men of conviction to stand up and fight. Will you stand up for us by standing with the opposition during election?

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  • Fallen on Deaf Ears:

    Everything seems to have fallen on deaf ears.

    The poor and the sick are crying in the wilderness.

    The elites are totally blind; their cronies blindfolded and beholden.

    The society fails. And so the Nation.

    Mankind is on the brink of destruction by its own actions. Greed is the Word.

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  • Reasonable:

    Reasonable request.
    More need to be done for the bottom 20%.

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  • C’est la vie:

    ******
    Ask away …………….

    But you ain’t ever gonna get a straight, bullshitless or honest response !!!
    ***
    ******

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  • Billy ma:

    The GST increase has to be carried out for only one reason – save face of lhl.

    Yes, it’s all about lhl’s personal pride that the GST increase must proceed.
    Lhl wants all to know again that what lhl wants, lhl gets. What lhl says, lhl will ensure it happened, virus or inflation don’t change a thing.

    This is lhl’s face at stake & nothing in the world can stop lhl. Period.

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  • KK Loh:

    For me the G can increase the GST but must distribute financial assistance more regularly so that the lower end of society will not suffer.

    Instead of a piecemeal action (eg the aditional one-time $300 GST voucher to be given out in Aug 2022), why not provide GST Voucher (cash) every 2 months instead of in Aug only.

    For the pioneer generation, just extend the silver support using only 2 conditions: housing and PRESENT income status. To give this silver support based on past employment is irrelevant because these pioneer generation may now have fallen on bad times and may need help.

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  • xoxo:

    The impending G$T INCREASE/S is/are not only badly timed; it is not equitable as it is made up to be as many needy sgs received a meagre sum of $600 ,much less than highly paid PMEs that include MANY FTs.
    An INCOME TAX INCREASE IS MORE EQUITABLE.

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  • James Lee:

    Disgusting and gullible policies dished out by the uncaring PAP Government over the past decades have undoubtedly created a substantial pool of SG senior voters living far below that poverty line.Whatever trusts that remain have all but disipated.The very least the one in power can do is to arrange for the immediate lump sum drawdown of another at least 20 percent by all seniors from their CPF account to meet rising COL.Act before it’s too late!!!

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  • opposition dude:

    It’s just greed for $$$, pure and simple. Whatever we say is no use since they are in control of everything. All we can do is vote as many of them out as we can whenever we have the chance to do so. With fewer monkeys in parliament they won’t be doing whatever they want whenever they want.

    The only problem is, as always, the majority kiasees don’t want to vote for the opposition. PAP definitely needs to lose more than a single GRC per election or else we will be suffering for years to come.

    So come on, make them lose more so we suffer less!

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