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.