TL;DR – Except that they are nicer because they still give something back to everyone.
Have you ever heard of the story about Robin Hood?
To cut the long story short, Robin Hood depicts a story of a legendary bandit of England who stole from the rich to help the poor.
If you think about it, the way the Singapore Government collects the Goods and Services Tax (GST) is a lot like the Robin Hood story – except that they’re kinder and better when it comes to disbursing it. They take money from everyone, and they give something back to everyone. They also give more to those who need more.
You see, the GST, currently 7%, is a consumption tax that is a broad-based consumption tax levied on the import of goods (collected by Singapore Customs), as well as nearly all supplies of goods and services in Singapore.
It is thus a tax on consumer spending.
In other words, the more a consumer spends, the higher the amount of GST the same consumer pays.
To put things into perspective, let’s compare the monthly household expenditure of Singaporeans based on their household income.
According to the latest Household Expenditure Survey 2017/18 from SingStat, the monthly household expenditure for households in the lowest 20% income group was $2,570, while the average monthly household expenditure of the top 20% households was $7,573.
Assuming a 7% GST is taken into account of their expenditure, the lowest 20% income group would have paid $168.13 for GST, while the top 20% paid $495.43.
These GST, collected from both the rich and the poor, would then be used to help fund Singapore’s expenditure in areas like healthcare, security, infrastructures and other social spending.
Although GST is collected from both the rich and the poor, what’s interesting to note is that these monies collected from Singaporeans are given back to Singaporeans in different forms – especially to the low-income families in Singapore through social transfers.
These are schemes whereby the government gives lower-income Singaporeans some money to defray the increase in costs of living due to GST.
On top of the GST voucher scheme, low-income workers also receive additional cash payments from the Government via the Workfare Income Supplement (WIS).
Do a simple math and you’d realise that with the GST Vouchers, the S&CC Rebate, and the WIS, low-income families are definitely getting more from the Government than the taxes they pay.
Although the rich may not get cash handouts from the Government, but let’s not also forget about all the other essential government services that all of us – both the rich and the poor – are enjoying.
These are things that we probably don’t even pay enough for, but still get to enjoy and benefit from nevertheless!