<TABLE id=msgUN cellSpacing=3 cellPadding=0 width="100%" border=0><TBODY><TR><TD id=msgUNsubj vAlign=top>Coffeeshop Chit Chat - Tharman: Reduce GST? Fed hope!</TD><TD id=msgunetc noWrap align=right>
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SINGAPORE: The government has no plans to cut Goods and Services Tax (GST), despite the economic downturn.
Singapore's Finance Minister, Tharman Shanmugaratnam, said on Friday that cutting the GST will not be effective. Instead, the 2009 Budget – which will be announced on January 22 – will be looking at helping the lower and middle income groups.
He said: "We don't intend to cut GST; we intend to provide a substantial package to businesses and households. We think it's best to put money in the hands of those who need it, that's the way we've done it in the past."
Last July, the GST was raised by 2 percentage points to 7 per cent. The government said the additional revenue generated is vital in helping to fund major social and infrastructure projects.
It was announced in February this year that the GST collection from the hike amounted to about S$1.4 billion. This revenue matched the amount of GST offset package and Workfare Income Supplement bonus given out in financial year 2007.
Businesses have been calling for a GST cut to help cope with the current economic slowdown and to give additional spending power to consumers.
But rather than opting to cut GST and lose revenue on that basis, Mr Tharman stressed that providing direct assistance to those in need is a more sensible strategy in a downturn.
The government plans to increase spending in areas like transport infrastructure and healthcare, and to bring forward hiring plans for the civil service. While this means a substantially larger deficit, Mr Tharman said he does not expect to dip into Singapore's reserves.
"We are looking at a combination of measures – some of it will be in cash. In the context of the downturn, we cannot ignore the need for cash. We are not talking about people needing luxuries but having to survive – meet daily, weekly, monthly needs," he said.
The government has also unveiled measures to help workers and companies cope with the economic downturn with a S$600 million skills upgrading programme for local workers over two years, and enhanced financing schemes to support an additional S$2.3 billion in loans to make it easier for companies to get credit.
While retrenchments are inevitable, the government wants to persuade businesses to retain rather than retrench workers by making more money for training available. More companies are, in fact, already in talks with the National Trades Union Congress (NTUC) on retrenchments.
Lim Swee Say, secretary-general, NTUC, said: "As we go through this downturn, do we cut jobs to save costs? Or do we cut costs to save jobs? If the approach we adopt is to cut jobs in order to save costs, then we'll see massive retrenchments."
Besides workers, companies are also beginning to feel the heat as they are finding it more difficult to get loans from banks. The government is stepping in to increase the amount of loan quantum available to smaller firms and to take on some of the risks so that it is easier for them to get loans.
[email protected]
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SINGAPORE: The government has no plans to cut Goods and Services Tax (GST), despite the economic downturn.
Singapore's Finance Minister, Tharman Shanmugaratnam, said on Friday that cutting the GST will not be effective. Instead, the 2009 Budget – which will be announced on January 22 – will be looking at helping the lower and middle income groups.
He said: "We don't intend to cut GST; we intend to provide a substantial package to businesses and households. We think it's best to put money in the hands of those who need it, that's the way we've done it in the past."
Last July, the GST was raised by 2 percentage points to 7 per cent. The government said the additional revenue generated is vital in helping to fund major social and infrastructure projects.
It was announced in February this year that the GST collection from the hike amounted to about S$1.4 billion. This revenue matched the amount of GST offset package and Workfare Income Supplement bonus given out in financial year 2007.
Businesses have been calling for a GST cut to help cope with the current economic slowdown and to give additional spending power to consumers.
But rather than opting to cut GST and lose revenue on that basis, Mr Tharman stressed that providing direct assistance to those in need is a more sensible strategy in a downturn.
The government plans to increase spending in areas like transport infrastructure and healthcare, and to bring forward hiring plans for the civil service. While this means a substantially larger deficit, Mr Tharman said he does not expect to dip into Singapore's reserves.
"We are looking at a combination of measures – some of it will be in cash. In the context of the downturn, we cannot ignore the need for cash. We are not talking about people needing luxuries but having to survive – meet daily, weekly, monthly needs," he said.
The government has also unveiled measures to help workers and companies cope with the economic downturn with a S$600 million skills upgrading programme for local workers over two years, and enhanced financing schemes to support an additional S$2.3 billion in loans to make it easier for companies to get credit.
While retrenchments are inevitable, the government wants to persuade businesses to retain rather than retrench workers by making more money for training available. More companies are, in fact, already in talks with the National Trades Union Congress (NTUC) on retrenchments.
Lim Swee Say, secretary-general, NTUC, said: "As we go through this downturn, do we cut jobs to save costs? Or do we cut costs to save jobs? If the approach we adopt is to cut jobs in order to save costs, then we'll see massive retrenchments."
Besides workers, companies are also beginning to feel the heat as they are finding it more difficult to get loans from banks. The government is stepping in to increase the amount of loan quantum available to smaller firms and to take on some of the risks so that it is easier for them to get loans.
[email protected]
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