Lower GST registration threshold lacks utility, social value

I concur with Mr Wilson Loo Kok Wee that widening the net to collect more in goods and services tax (GST) would only hurt small businesses and low-income households ("Lower GST registration threshold will hurt small businesses"; Feb 13).

Since its introduction 22 years ago, the goods and services tax has been raised from 3 per cent to the current 7 per cent.

This single tax alone accounted for 24 per cent of all tax revenue collected by the Government in financial year 2014/2015.

Moderate growth in private consumption has boosted GST receipts to $10.2 billion.

At first glance, it is already hard to find justification for widening the GST net, considering that the current quantum seems adequate to support current levels of government spending.

Widening the GST net would impose an additional burden on smaller businesses which are likely to lack the resources to consolidate their accounts, let alone make payment.

It would also adversely impact consumers who depend on these small businesses, and these are likely to be members of the lowest socioeconomic strata.

Given that they represent the most vulnerable segment of our society, who should receive additional assistance rather than being encumbered, an added tax burden is counterproductive.

In essence, a lower GST registration threshold lacks both utility and social value.

If it is absolutely necessary to increase tax revenue, perhaps it would be more meaningful to look at the personal income tax system.

At present, Singapore already maintains lower income tax brackets than many other developed nations. Individual income collection made up only $8.9 billion, or 21 per cent, of overall tax revenue.

Raising the chargeable tax rate for the highest income brackets is an intrinsically progressive system that draws revenue from those who can afford to pay.

Looking at the bigger picture, if the state is eager to look for additional revenue streams to support increased spending, perhaps it is time to review our national budget priorities.

After all, reallocating resources within the established levels of spending would be more sustainable and considerably less disruptive than any change to the inflow of funds.

Paul Chan Poh Hoi