Monday, February 01, 2010

GST is wasteful

Question: What is worse than income tax?
Answer: Income tax and GST.

It is wasteful for a country to have both income tax and GST. It lays a heavy burden on businesses to keep two sets of accounting records to report their earnings (for corporate tax) and for GST. This adds to the cost and complexity of doing business. It is wasteful for a country to collect tax (GST) on every item of transaction every day.

IRAS claims that GST is simple. That is not correct. You can read the GST instructions in IRAS website to know that it has many rules that have to be followed to prepare a GST return - similar to the complex rules needed to prepare income tax returns.

Critics argue that GST is unfair to the lower income group. I agree, especially as they do not earn enough to feed a family. To top it up, GST is also an inefficient  tax, adding unnecessary cost to business, that has to be passed to consumers.

I am aware that any Government needs to collect enough tax revenue to fund its operations and take care of the country. Tax is necessary and important. But, we need to have more efficient and fair ways to collect tax. GST is one of the worst methods that has been devised, especially as it is implemented as an additional layer on top of income tax (personal and corporate).

Tan Kin lian


Tan Kin Lian said...

GST is a wasteful tax. Already, businesses have to pay accountants to keep records for corporate tax. They now have to engage more accountants and keep more records to prepare the quarterly GST returns.

The two layers of taxaction add to the cost of doing business and has to be transferred to the consumers through higher prices. It also make it more costly to do business in Singapore.

Tan Kin Lian said...

I prefer that the Government collect the tax that it needs through income tax (earned income, investment income and profits) and scrap the GST.

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