GST offset: Less people getting more or less cash?

GST offset: Less people getting more or less cash?

By Leong Sze Hian

I refer to the article “Singaporeans to receive letters next month on benefits from Budget 2013” (Channel NewsAsia, Jun 28).

Report everything except?

Such a long news article, but guess what? The most important and obvious piece of information that arguably everyone who read such news may be asking is missing?

The very long article talks about everything else –

  • “top-up of S$200 to the CPF Medisave Accounts of all Singaporeans aged 45 and above …
  • Enhanced Workfare and Personal Income Tax Rebates …
  • GSTV Cash, Medisave and U-Save payout, together with the GSTV Special Payment, will cost the government about $1.2 billion …
  • 1.4 million Singaporeans eligible for GSTV-Cash …
  • For GSTV-Medisave, some 370,000 elderly Singaporeans aged 65 and above …
  • 800,000 HDB households will receive payout in regular GST Voucher-U-Save-and Special Payment …
  • S$135 to S$195 worth of GSTV-U-Save rebates … and so on, and so on –

but what is the most important piece of information missing from this list?

Can you guess what is it?

Amount is too embarrassing – is it?

It might just be as if it may be too embarrassing to tell you this missing information!

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 negative real median wage growth in 4 out of the last 5 years.

Up to $3,000 benefits?

I received 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?

In any case, are Medisave top-ups like disposable cash that you can use?

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 were increased last year by almost all the 14 PAP 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.

Tax savings?

As to “tax savings”, I 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?

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

This 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 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 last year 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 (I 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?