GST voucher – 2007 2.1m get it, now 1.3m?


1.54m get GST vouchers, Medisave top-ups

I refer to the article “1.54m Singaporeans to get GST vouchers, Medisave top-ups this year” (Channel NewsAsia, Jun 20).

Maximum GST Cash voucher of $500 per adult?

It states that “Under the GST voucher benefits, 1.3 million eligible Singaporeans will receive up to S$300 in cash. In addition, as announced at Budget 2016, households will also get a one-off special payment of up to S$200 in cash.

This means that eligible recipients will receive up to S$500 in cash this year, which will be disbursed in two payments in August and November.
1Help pay GST?

We should keep in mind that I believe the original purpose of the GST offset scheme was to help lower-income families pay for the GST when it was introduced.

For example, even a lower-income family of say two adults and two children, spending just $1,200 a month, would incur GST of $1.008 ($1,200 x 12 x 7 per cent) a year.

So, the maximum GST Voucher cash payment of $1,000 ($500 x 2 adults whose individual assessible income is less than $26,000, in this example), may only just cover the GST that they incur.

In a sense, those who spend more than $1,200 a month – may not get enough to offset their GST.

More help for lower-income in 2007?

When the GST rate was raised from 5% to 7% in July 2007, a household in the bottom 20% had to pay additional GST of $370 per year, but received an offset package of $910 per year, in addition to permanent benefits of $1,000 per year. (“Budget debate round-up speech“, Mar 2, 2011)

Less help now?

It’s GST Cash of up to a maximum of $500 per adult now.

As to the Medisave top-up for those age 57 and above , it can only be used for medical purposes and insurance premiums, and is thus not cash that can effectively offset GST expenditure.

So, after adjusting for inflation since 2007, are lower-income families arguably, effectively getting less now under the GST Voucher scheme, compared to the previous GST Offset Package?

2.1m dereased to 1.3m – get GST Cash voucher now?

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

So, why has the number getting GST Cash vouchers apparently decreased by 800,000 (2.1 million – 1.3 million) Singaporeans or 38 per cent, to 1.3 million now?

Republished from Leong Sze Hian’s website.