Vouchers offset over 90 per cent of GST paid by needy

SINGAPORE - More than 90 per cent of the goods and services tax (GST) paid by lower-income households was offset by the GST vouchers they received last year.

These households also receive benefits in other areas such as education, housing and health care which are "far more than the taxes they pay".

Senior Minister of State for Finance Josephine Teo said this in Parliament yesterday, in her reply to Non-Constituency MP Gerald Giam.

He had asked what percentage of GST paid by the lowest 20 per cent of households by income had been offset by all forms of GST vouchers on average last year.

For these households, regular GST vouchers offset about half the GST they pay, said Mrs Teo.

If the one-off GST voucher special payment announced in Budget 2013 is included, the benefits from the GST voucher scheme cover more than 90 per cent of the GST paid, she added.

The GST voucher scheme is a permanent feature of the social safety net which began in 2012.

Its benefits are given out in cash, Medisave top-ups and utility rebates.

But the scheme is not the only form of rebate on the GST paid by lower-income households, said Mrs Teo.

"The GST voucher is part of a progressive system of taxes and benefits that ensures that lower-income households get back far more benefits than the taxes they pay, including GST," said Mrs Teo.

"These include childcare subsidies, financial assistance from school till tertiary education, Workfare, special and additional housing grants, and health-care subsidies. The GST that they pay is hence far more than offset by the benefits they receive."

Mr Giam, in a follow-up question, asked about the Government's philosophy behind the scheme. Mrs Teo replied that it was to ensure some form of permanent support for lower-income households who pay GST.

"It exists as part of a broader set of benefits that are provided to different households.

"It is within this context that the GST scheme is designed, so we look at the benefits that are provided to households holistically," she said.

charyong@sph.com.sg

This article was published on April 15 in The Straits Times.

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