Published in Straits Times Online Forum on 10 January 2012
MY SINGAPOREAN friend who travels regularly to Hong Kong told me that he stopped buying many electrical products from Singapore as he can get them 20 per cent cheaper in the territory.
What accounts for this difference? Singapore imposes a goods and services tax (GST) of 7 per cent, but what about the difference of 13 per cent?
Although commercial rentals have been escalating in Singapore, they have always been high in Hong Kong.
I suspect that the real cost of GST is more than 7 per cent. There is the heavy compliance cost, especially for small businesses, of keeping accounting records of GST input and output, and submitting quarterly returns to the Inland Revenue Authority of Singapore.
There is also the multiplier effect of GST, as small businesses may not be able to get the full benefit of the refund from GST input. The higher cost of living faced by employees as a result of GST has to be reflected in their salaries, leading to a multiplier effect.
Businesses in Singapore also incur the cost and inefficiency of making and receiving most of their payments by cheques. There is also the high cost of complying with many regulations. Even the calculation of monthly Central Provident Fund contributions can be a headache, given the different rates of contribution for different employees.
Another friend, who has experience with manufacturing costs in many countries, told me that manufacturing in Singapore has become rather uncompetitive and can be sustained mainly by tax incentives and concessions given to some multinational companies. This is not a healthy trend for our long-term development.
I hope the Government will take urgent measures to address the underlying obstacles to our competitiveness and the causes behind high business costs.
Tan Kin Lian
9 comments:
I think the govt must have their reasons, after seeing the big picture, why having GST is better than taxing the rich more.
If having lots of foreign talents also has its pros and cons, so why not GST?
And why not if they can still get at least 60% mandate at every election, despite GST, among other things?
TKL has a point here, our competitiveness has been eroding consistently through the years. High cost is the impeding stone under our feet. Businesses have to resort to saving costs in other ares in order to survive or maximize profits,
Take SMRT as an example. Maintenance costs of rails and renewal or addition costs of trains are high. So SMRT, under former CEO, Saw, resort to importing of cheaper trains manufactured in China to cut renewal costs and maintain ever demanding profits on its balance sheets. But the China made trains are not compatible with our older rail models, resulting in the new trains damaging the rails, thus creating the recent hula hula train chaos. A CEO with rail engineering background would have seen such incompatibility, not a property retail specialist, hired by Ho Ching back in 2002.
So high costs is a prime factor in producing low quality products and services, or cents wise, dollars foolish.
It was the Opposition Low Kia Thiang who revealed in Parliament yesterday that the new China made trains that are incompatible with SMRT rail system on the ground. Why it is not revealed in the mainstream papers today. There are altogether 20 such trains in operation, and how is SMRT going to solve the problem of trains not "touching" the rails on the ground, other than going very slowly. So commuters have to watch out whether the train is old or new before getting on. The possibility of derailing, like the incident of the new train derailing over the bridge in China, may happen here.
Our Transport Minister has to be more truthful and transparent, With the Internet, the Govt cannot hide things anymore. That's why we need more opposition in Parliament to protect our interests, and maybe our lives. Now we know why Saw has to resign with immediate effect, this problem is created by her in trying to reduce costs, at the commuters expense.
All this increasing cost is ultimately borne by the consumers and we are suffering. I remember 10yrs ago when my 1st daughter started primary school, her schoolbus fare was $45/- and today my younger daughter is paying $70/- for the same school bus. This is an increase of $25/- or 55% from 10yrs ago. Our pay has definitely not increased by 50%. Such increase is going to blow cost for the consumer out proportion.
Singapore Govt will always take the "softer" and "easier" options to "make" or "collect" money within the value chain.
(a) Collect GST -direct and upfront while spiralling. People collect GST for the Govt.
(b) Collect ERP. You pay cash card upfront...they just build gantry with taxes.
(c) Collect money from "land sales"...people tender and then build ECs and condos. They build less BTOs.
(d) Collect COE. People manufacture cars.
(e) Manage people's CPF by investing them in risky soft "options". People work hard to earn CPF.
Rex comments as follows,
It is not a joke when people say PAP means "Party Against the People".
By definition they are against the people so dont expect too much.
rex
While expecting too much from PAP can be unrealistic at this moment, I do expect 'People Power' to turn up in full force to bring down the curtain on 'Lee Dynasty' come 2016 - the next GE.
Bring down the "Lee Dynasty" is a slow process. He did mention he does not want to stay on as SM, MM or ESM. Anyway, it is unlikely to have a 4th generation Lee.
We will see a successor in next GE and I also see WP gaining more constituents. PAP is so well paid that they just don't know how to work with the ground anymore. I don't see my MP before GE. After GE, I still don't see them. If Opposition follow the queue of WP Sylvia action i.e. visit Aljunied residents once a week, I think the can take Bishan and Potong Pasir.
The incremental increase in cost of living like food, transport, education etc cannot be appreciated MPs or Ministers. If I draw $190,000 or $1,100,000 a year, what is the increase of 10 cent or $10 or even $100? For goodness sake, the old ways of forcing policies down the throat of voters are gone. This is expecially so for Ministers Salary. So much time and discussions wasted while Ministers and MPs still enjoying what the majority of heartlanders can only dream of. Why must they continue to insist they are special and must be paid more than any other countries while most work are done by others. If PAP continue not to engage the people through the old fashion way, they will continue to lose support. Sitting high up there and assume things are fine is just waiting for another round of disaster. Come Monday, I don't see any new reasons PM can give on the issue of Ministers' Salary. It will be the usual pay them well else we are not getting good people. Mr Yacob was a Associate Professor in NUS before becoming a Minister. This is a quantum leap in Salary. It also shows that there are political talents in the salary range of a Associate Professor. Jumping from maybe $150,000 a year to $1,570,000 a year is not the way to take advantage of tax payers money. The best way to close this issue is to hold a referendum and get the public consensus of what consider acceptable if the Govt totally clueless or lost touch with the people.
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