[GST]: Is tax on tax equitable?

voices: Our water utility bill contains a Sanitary Appliance Fee, a Waterborne Fee and a Water Conservation Tax.
Is tax on tax equitable?
FROM TONY LOKE YUE CHONG - 10July2013.

Our water utility bill contains a Sanitary Appliance Fee, a Waterborne Fee and a Water Conservation Tax.
The PUB describes the first two fees as levies to offset the cost of treating used water and for operating and maintaining the public sewerage system. Both charges are tax contributions to Singapore’s used water system. The Water Conservation Tax is charged for the use of water. It is levied to reinforce the importance of conserving water.
It is clear that the three charges are deemed as taxes. Notwithstanding that, the Goods and Services Tax is imposed on these levies — effectively a tax on tax. This may be technically legal, but the important question for consumers is whether it is equitable.
http://www.todayonline.com/voices/tax-tax-equitable

Resources:
en.wikipedia.org/wiki/Tax :"According to Black's Law Dictionary, a tax is a 'pecuniary burden laid upon individuals or property owners to support the government [...] a payment exacted by legislative authority'. "

References:
- 'Double tax for water use not fair': "Why does one have to pay a double tax – the conservation tax and GST on it – just to get water from a tap? The authority should look into the issue as it seems oppressive, considering that water is a basic necessity." [My Paper, 05Sept2011]


Tags: Taxation, government, finance, revenue, budget, Singapore, law, resource, water,

A1 forums, my response mirrored here:

dankoh148 (10July2013) said:

Thread: [Utility tax] Is tax on tax equitable?
Actually, everything u consume is tax twice. Eg. u bought an apple for $1 from NTUC. U pay $1.07, NTUC bought from supplier(XYZ apple distributor) at $ 0.50 and pay $ 0.535
So 1 apple was tax on GST twice. Lets not talk abt the one who sell the apple to NTUC.

BC: The words '(XYZ apple supplier)' added fr clarity in my reply.

Click to expand...

Sorry, U got it WRONG, no offense, here's why:

Yes, NTUC will pay 3.5c to supplier for apple supplies, however, NTUC will only pay govt it's incremental margin of GST collected of 3.5c per apple to government despite having collected 7c per apple in GST from you the consumer (3.5c GST refunded to NTUC since it was 'paid by its supplier' (XYZ supplies))

Thus, the total GST collected by SG govt per apple sold to consumer is 7c and NOT {7 + 3.5 + ... etc}.

The following news report 'Fraudulent GST claims put sole-proprietor in jail (25 Oct 2012)' illustrates how suppliers can fake GST weighted purchases to cheat the government of money through fraudulent GST refund claims by simply claiming to have run their business at a loss (more GST paid than received) an so get 'free money' from the government, unstopped, unless they are caught red handed of course....

Again another mirror, hope SBY is safe repository, tks.
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dankoh148 said:

Re thread topic: [Utility tax] Is tax on tax equitable?
Yes, u also forgot the supplier who imported the apples also need to pay GST too.

Click to expand...

Pls read again the case at IRAS website: 'Fraudulent GST claims put sole-proprietor in jail' again to understand the law better (although this thread actually pertains to a different side of the GST issue).

I repeat the gist of the GST philosophy- that is that the govt 'earns' just 7% of the price of goods FINALLY consumed since each supplier/ the eventual retailer only pays the net share of GST collected to the govt.

In the case of a one supplier and one retailer (NTUC example) U just described, govt gets 3.5c each fr NTUC and the supplier. Basically the final consumer pays the GST though it is collected in steps along its supply chain.

It is supposed to operate beautifully in theory but in practice, some suppliers/ retailers have drawn up cunning schemes involving false invoices of GST paid to fool and cheat the government as the example shows. These retail cheats thus have to be identified and punished.

Now back to the original issue of service charge (GST) being charged on a 'penalty' (water conservation tax)- perhaps U might want to start a new thread about GST double charging for goods and services (sans govt charges and penalties) and invite me to it, tks for keeping to the thread topic.

Morality based taxation in Singapore, and the hierarchy of it all (H2O consvn tax, GS

Morality based taxation in Singapore, and the hierarchy of it all (H2O consvn tax, GST etc)
[pict sourced fr Google Image (used w apologies)]
It has recently caught my attention, 2 consecutive letters to the press to which the government has scan answered I believe.

The first is by Mr Chin Kee Thou 'Double tax for water use not fair' (My paper,05Sept2011) in which he pertinently states: "The water-conservation tax is levied as a deterrent or penalty against excessive use and wastage of water, and is similar to a fine for traffic offences.
The conservation tax and traffic fine are neither goods nor services, and the latter is not subject to GST.
Why does one have to pay a double tax - the conservation tax and GST on it - just to get water from a tap?"

As well as the letter by Mr Tony Loke Yue Chong 'Is tax on tax equitable?'[TODAY, 10July2013]" The Water Conservation Tax is charged for the use of water. It is levied to reinforce the importance of conserving water..... the Goods and Services Tax is imposed ... effectively a tax on tax."

The 2 authors are both right to point out firstly- that inasmuch as water is a basic necessity no human can live without, the conservation of such a resource is also something no Singaporean can afford to forget about- indeed the survivability of every society is premised upon the availability of fresh water; and secondly, that seldom is anyone eager to pay tax, and certainly not a multi-layered tax.

In Tax - Wikipedia, the free encyclopedia :"According to Black's Law Dictionary, a tax is a 'pecuniary burden laid upon individuals or property owners to support the government [...] a payment exacted by legislative authority'. "

Implicit in this definition is the understanding that the quality(morality) of government equates the quality (morality) of life and development in society.

As old as the hills, have issues of 'pecuniary burden' caused much strife and friction between governments and their charge.

So whilst there is scant doubt that a multi-layered pecuniary burden has indeed been imposed, so too must the necessity/ desirability (of such taxes) be determined (see tobacco duty/taxes for tax similarity).

So may I thus humbly suggest that henceforth from now that, 'Water Conservation Tax' be renamed 'Water Conservation Duty(National Survival)' so that besides being "technically legal" [TODAY, 10July2013] all who reside in Singapore will understand and smile, and rise with gusto to pay their 'Water Conservation Duty(National Survival)'- knowing that clean water is secure because society respects its value.

That 'Water Conservation Duty(National Survival)' is charged even before GST because it is a necessary, reasonable mandate by the government (like national service)- so essential for the nation's survival, that one cannot possibly opt out of paying- so that come what may, even without PAP enforced 'meritocracy', without GST, a plummeting GDP or whatever else PM 'Midas' Lee pronounces "special", clean water will always be plentiful. Because all Singaporeans respect the value of water well, they grew up paying 'Water Conservation Duty(National Survival)', even when all government explanation (defense for it) (AFAIK) failed.

PS: Whilst the value of 'Water Conservation Duty(National Survival)' could be GST zero rated (such as the value of investment precious metal), such would be mere mathematical acrobatics. (the effective first tier rate in the $515.80 bill annexed is 30% X 1.07 = 32.1% post GST; the same tax rate would be arrived if WCD(NS) was 32.1% and GST zero rated).

Wherever morality was built on sound foundation, society never failed.
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Hope that U could smile reading this.
Feedback most welcome, tks.