More questions, but I don't have any answers

My letter has been published, and it's more or less there in its entirety. They only thing they removed was the comparison I did, and I think the essence of what I wanted to say was very much preserved. Oh, and they used "Government" when I used "government".

Today, there is another article in the Straits Times where our defence minister Teo Chee Hean re-iterated the point that the government's (no capital "g") intention is not to hurt the lower income. I don't doubt that, but I do believe the consequences of the GST hike will be exactly that, for reasons I have already outlined in the letter.

The argument that a growing economy will help them to shoulder this burden is, in my opinion, iffy at best. For one, there is the widening income gap, which already shows that the poor are getting left behind as the rest of our economy grows. This better ability to pay taxes doesn't apply to them. If the government can come up with the figures to show that GST is not regressive, or if they have concrete figures to show how their help packages will help this group of people, not only in the short term, but also in the long term, then I stand to be corrected. But as it stands, I don't see how we are going to be able to help the lower-income when they are going to be the ones paying for it.

So, if not the lower-income, who is going to pay for it? Something's got to give, and if we want to help this group of society, we are going to have to finance it somehow. As I mentioned, exempting necessities from GST might go some way into mitigating the burden on the poor. It will also however, affect tax revenues. So that means we might have to end up paying even higher GST. Without figures on tax revenues and government spending, I do not know if this is necessary. But I do feel that if our government wants to increase GST, it should at least have some figures back up its claim.

Also, I think that any increase in GST should be carefully considered. Have studies or surveys been carried out to map out the spending of the various income groups in our society? If so, where are they? And if not, then they should be undertaken. If spending patterns can be determined, then we will be able to gauge how regressive the GST really is, and how effective exempting necessities will be it mitigating that effect. In addition, it would also help us determine how our various taxes should be structured so as to help the lower-income.

As for cuts in income and corporate taxes, how much revenue does the government generate from these 2 sources, especially in comparison with revenue from GST? Teo Chee Hean mentioned that reducing income and personal taxes would encourage individuals to innovate and create business. I'm assuming that the logical extension is that this innovation and business will in turn be beneficial to Singaporeans.

The question is, how much of the benefits of greater innovation and businesses really go back to the lower-income? Furthermore, how much of an impact does lowering taxes really have on innovation and business anyway? When people want to start up businesses here, is it really the corporate tax structure that they view as a hindrance? Or are there other factors like red tape which might play a bigger role in discouraging people from doing so? In effect, what I'm asking is how much of a disincentive is the rate of corporate and income tax in reality?

These are just some of the questions I feel should be asked when we are considering the best way to finance help for the poor. There probably are other things to consider as well, but this is just off the top of my head. For now, I'm just waiting to see if there will be an official response.