Higher-income households consume more. Such an exemption would benefit them more.
- Instead, we charge the same GST rate on everything, and then use part of the GST revenue to target help for lower-and middle-income Singaporeans and seniors through GST Vouchers and other subsidies.
This is fairer and more effective, and makes sure the help goes to Singaporeans who really need it.
Experience of other countries shows that multiple rates complicate the GST system.
- Difficult to define a necessity leads to many disputes.
Raises compliance costs for businesses.
Link to https://www.mof.gov.sg/docs/default-source/default-document-library/ifaq-gst-2020/gst_q8.jpg (image of other countries' VAT classification on essentials).
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