The curious case of the GST Increase and the trust that PAP expects people to have in the govt

The cat is now out of the bag and government has pretty much tacitly confirmed that the Goods and Services Tax (GST) is set to increase from 7% to 9% some time between 2021 to 2025. Given official statements issued by the government before the General Elections of 2016 (GE2016), the government appeared to have unequivocally denied the possibility of a GST increase.

In public statements, they made clear that the government plans ahead and that there is enough from income tax not to have to increase GST. It seems therefore rather strange that a government who professes to plan ahead did not seem to have foreseen the need to announce a raise in GST in just under 3 years? So much for planning ahead!

Either that or the government has very cleverly planned the timing of their announcements to reassure the public before GE2016 to ensure maximum vote share. Neither scenario is very reassuring.

In considering which scenario it is, it is important to note that there are slight differences between the 2 purported identical statements issued by the government.

In the third hyperlinked article “unequivocally denied the possibility of a GST increase”, there is an additional line inserted at the end of the article stating : “This article is accurate as of Aug 2015.” This crucial statement is missing in the second hyperlinked article “statements”.

Incidentally, this second hyperlinked article is found in the “archives” section of the Gov.SG website which suggests that this was the original article which has now been amended to insert the disclaimer. When was this disclaimer added and why?

Is this a fudging exercise to prevent the government of being accused of misleading the public about GST increments pre GE2016? Or was it to rectify an oversight by the government?

Also, why is there such a wide time period for when GST is meant to increase? Between 2021 to 2025? That is 4 years! Given that the government allegedly plans ahead, it should surely know with greater certainty when GST will need to be raised? Why the 4 year period then?

Given that our next election is set for sometime 2020, is this raise (which will coincidentally takes place after the election) meant to ensure that the PAP gets the votes before increasing the tax? In fact, by giving such a wide spectrum for timing, the People’s Action Party (PAP) can in fact potentially squeeze in 2 more general elections before finally increasing the GST – thereby ensuring the maximum chance of killing 2 birds with one stone. I.e. Winning 2 elections and still getting their GST increase.

Whichever way I look at it, there appears to be some fudge going on. Did the PAP know ahead of GE2016 that they would have to increase the GST? Did they choose not to divulge this to the public because they did not want it to affect their vote share? Why is there a 4 year period between when the taxes will be increased? Don’t the public deserve greater certainty?

Giving themselves such a wide berth seems to give rise to the suspicion that this will somehow be used to ensure that the government can keep its options wide open to ensure the best result for them.

Addressing the GST issue in Malaysia and how it played in Malaysia’s recent General Election at the end of the President’s address, Prime Minister Lee Hsien Loong said that voters have to trust the government to do the right thing on their behalf, even when it is painful.

He noted that the country will need to spend more – on healthcare, defence, education, or something else – and if revenues are not enough, it will have no choice but to raise taxes. Then, the government must convince the population that it is raising taxes for a good reason, for the right reason. And whether the voters accept that will depend not just on the arguments, but also crucially on whether they trust the government.

Other than going back against its earlier promise about not raising GST, PM Lee’s point about trust seems to be pitted against the situation where Singapore announced a surplus of $9.6 billion for FY2017 and at the same time, say it needs to increase GST hike to 9 per cent because Singapore has to ensure revenue is sufficient to meet the country’s spending.

Without a strong alternative media and opposition politicians to challenge these things such as the 9% GST hike, we will never know the truth and what to trust. Is this the society we want to live in?

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