Singapore budget highlights boo-boo

I can't believe this. Some Singapore finance ministry officials ignore the difference between percent and percentage points! Please visit the Singapore government online portal and download a PDF copy of the 2007 budget highlights and read the bits about the Goods and Services Tax (GST), the Singapore version of the sales tax.

The GST will go up from 5 percent to 7 percent from July 1. That, in the highlights, is called a 2 percent GST hike.

Excuse me, the jump from 5 to 7 percent means an increase of 2 percentage points, which is more than 2 percent. The difference is explained in the online Dictionary of English.

A percentage point is a unit expressing the difference between two percentages; a fall of one percentage point would be a fall from ten to nine percent.

But if the 10 percent fell by only 1 percent, it would come to 9.99 percent.

How on earth did the budget highlights end up describing the GST hike from 5 to 7 percent as a 2 percent increase? Let me guess. Subtract five from seven. And the answer is two. But that's kindergarten arithmetic, not how percentages are calculated.

The Economist Style Guide specifically warns against such errors:

Percentage point: A unit of size, a one-hundredth of the total. Not to be confused with percentage change. When something increases by 1 percentage point this may be quite different from a 1% increase. For instance, if GDP grew last year by 1% and this year by 2%, the growth rate this year increased by 1 percentage point compared with last year (the difference between 1% and 2%) and also by 100% (2% is double 1%). A 1% increase would mean that the growth rate this year was only 1.01%.

It's hard to believe that finance ministry officials don't know the difference. Maybe they wanted to keep the budget highlights simple. Apparently, it's not unusual to do so. The online Dictionary of English says:

"When the Chancellor (of the Exchequer, in Britain) announces that he has reduced the bank rate by one per cent, he usually means that he has reduced it by one percentage point."

But is it fair to suggest the GST hike is lower than it actually is? That's the impression given when it's described as a 2 percent increase.

I noticed the error while reading a Straits Times front page report today about the "2 percent GST hike". I thought the mistake had been made by the reporter, but wondered how it passed unnoticed. One expects Singapore's leading newspaper to get its facts right. So I checked the budget highlights -- and found The Straits Times was simply parroting the official line. That's usual in Singapore. All the more reason for officials to be accurate.