Tax relief compared with a business deal

The cost of living is about to go up in Singapore. The sales tax or the Goods and Services Tax (GST) will go up from 5 per cent to 7 per cent from July 1, the government announced, unveiling the budget yesterday.

Everyone knew about the coming tax hike. The government had been talking of the need to increase revenues so it could help the poor and develop Singapore further. The only question was whether the tax would go up to six or seven per cent.

Now we know. Amusing, isn't it, that the news came just a day after Valentine's Day? Had a romantic dinner? It's time to get real.

The government is there to help. To help the people cope with the tax hike, it announced a GST Offset Package that will cost four billion Singapore dollars (about $2.6 billion) over five years. Of this amount, 1.8 billion Singapore dollars will be paid in cash in the form of tax credits, said the government-linked Channel NewsAsia.

What it didn't say was that the cash assistance to be given to the people was less than what the government-linked Temasek Holdings paid for a stake in the Thai communications giant, Shin Corp. Temasek bought it for $2.1 billion last year from the then Thai prime minister, Thaksin Shinawatra. The deal raised such a stink in Thailand it eventually brought down Thaksin, who was deposed in a coup. He was excoriated for not paying taxes on that sale. Singapore also felt the heat with the Thais upset by the sale of one of their biggest companies to foreigners.

There's no comparison, of course, between a business deal and people assistance. But the moment I discovered the amount the government would spend, I wanted some figures for comparison. And the Shin Corp deal is still in the news. I found out how much it cost from a recent report in the International Herald Tribune about Thaksin's daughter being called to testify before a Thai panel probing that deal.

The government's relief efforts won't end with the four-billion-Singapore-dollar GST Offset Package. On top of that, to help poorer workers, it will give handouts amounting to 400 million Singapore dollars a year. But to get those handouts, one must work. God helps those who help themselves.