Taxing the masses to aid the lower-income

Singapore Prime Minister has announced that the goods and services tax (GST) will be increased to 7% from 5%. This increase, he says, is needed to support the lower-income group. I am rather skeptical on this move. Defence minister defended the move as saying that the wage increase over the years offsets the GST increase. I have other opinions.

First of all, the GST will affect the whole population, impacting the lower-income group the most. Even though the tax increase is dedicated for the group, it is never able to provide total coverage to every low-income person. The uneducated, older folks, or people that do not keep in time with government policies may not notice that there are packages for them. They will miss the packages, and at the same time get hit by the GST spike. Hence, it can't be said that the entire group can be aided by a GST increase.

The rise in tax will create a burden to the middle-class, especially the bottom end of it. Wage increase over the years should not be an indication that a GST increase should be okay for this group. Rising transport costs, high living costs, etc have cancelled off the wage increase over the years.

The middle-class in Singapore is a significant group. This tax hike will certainly be used as a political tool by the opposition to prove that the ruling party has yet again chose to increase taxes after election, accompanied by election goodies.

The fund needed should be generated from other source than the tax of the whole population. My personal view is that such a fund should arise from a pool of cash coming in from different sources. For example (really just example), 10% can come from COEs, 20% from cigarettes tax, etc. Just a personal view.

Does sanction still help?

The United States of America used sanctions to pressure DPRK into giving up its nukes, after the latter fired a nuclear warhead trial. The sanction was passed as a resolution of UN. Within weeks, DPRK announced that it is returning to the round table for talks. Did the sanction on DPRK resulted in peaceful talks?

There is a debate about whether sanctions should be used to pressure DPRK or more trade with DPRK to force it to come out of isolation and then in the hope that democracy will be brought in.

I believe that sanctions are not useful against countries which are poor. DPRK cannot even afford to feed its own people, and most of the aids given to it is channelled to the military. If sanctions are imposed on it, more people will suffer from starvation and the act of sanction would be deemed inhumane. Forcing more people to die for someone to give up nukes.

On the other hand, sanctions are more useful for Iran, a more developed nation which is also meddling with nukes. A united UN resolution on Iran will definitely have a much better effect as the upper class and middle class will pressure the government. And sanctions against Iran will not be labelled "inhumane".

By infusing DPRK with lots of aids, recognising it as a nation, develop bilateral ties and trade ties, allowing it to gradually enter the WTO, should be the direction for the US to go. Just like what the DPRK said, "Sanctions mean war", sanctions for an impoverished state literally means cutting the lifeline of it.

The US needs to also muster key players in participating in a sanction act prior to enforcing it because solitary action makes one look arrogant and lonely. Iran still trades with China, making the US look played out as China steps in and benefit from one competitor less.

Sanctions hardly help.