GST Offsets for Low-income Households

Mr Gerald Giam Yean Song asked the Deputy Prime Minister and Minister for Finance (a) on average, what percentage of GST paid by the lowest 20% of households (by income) is offset by all forms of GST Vouchers last year; and (b) whether the Government will consider fully offsetting the GST paid by all households in the lowest quintile even in years when there are no one-off Special Payments made.

Mdm Speaker, in 2013, for the lowest 20% of households by income, on average, about half of their GST paid would have been offset by the regular GST Voucher. If we include the one-off GST Voucher Special Payment announced in Budget 2013, the benefits from the GST Voucher would have covered over 90% of their GST paid.

However, the GST Voucher scheme is not the only offset for the GST paid by lower-income households. 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. These include childcare

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subsidies and financial assistance from school to tertiary education, Workfare, special and additional housing grants and healthcare subsidies. The GST that they pay is hence far more than offset by the benefits they receive.

Madam, I thank the Senior Minister of State for the reply. I would like to clarify: what is the Government's philosophy behind the GST Voucher Scheme? Is it meant to offset the taxes that are paid by the lower income through GST? Or is it meant to just partially offset it?

I understand the Senior Minister of State's point that there are other vouchers and other subsidy schemes that would help to offset the cost of living, but specifically for the GST, does the Government see it necessary to fully offset the GST paid by the lower income, in recognition of the fact that it is a regressive tax? Because that was the understanding and the impression that I had when the GST Voucher Scheme was launched.

Mdm Speaker, I thank the Member for his question. The GST Voucher Scheme is a permanent scheme. When the scheme was introduced, the idea was to ensure that even for lower-income households where they paid GST, there would be some form of permanent support for these households. But it does exist as part of a broader set of benefits that are provided to different households. And it is within this context that the GST Voucher Scheme is designed. So, we look at the benefits that are provided to households holistically and provide the support where it is most meaningful to them.

If I could also share and remind Members of the House, in every Budget, the support measures that are provided to lower-income households have been strengthened in many different regards. It could be in education; it could be in childcare; it could be in healthcare; it could also be in housing. So, we have to look at all of these in totality.