Overall Impact of the GST Offset Package on Households

6.18 Let me summarise the overall impact of the GST Offset Package for Singaporean households. Most households will receive GST Credits, Senior Citizens’ Bonuses, PSEA top-ups, U-Save, S&CC and rental rebates, and property tax rebates. Taking these offsets alone, those living in four-room flats will receive benefits that are, on average, seven times the extra GST that they will have to pay each year. In other words, seven years’ worth of offset. Even those in executive flats will receive four years’ worth of offset on average. The lowest-income households will receive the most. For instance, two-roomers will receive about 16 years’ worth of offsets, or 16 times the increase in their annual GST expenditure. More details can be found in Annex E.

6.19 Take the example of an average Singaporean family living in a four-room flat. This example is typical. If I were to choose a lower-income family, the benefits would be larger. Husband, aged 42, earns $2,800 a month. His wife, aged 37, earns $1,000 a month. They spend most of their take-home pay, or about $3,000 a month of spending. They will pay an additional GST of $57 per month or $685 per year typically. The couple has two children, one in primary school and the other in secondary school. They will get a total of over $4,200 from the GST Offset Package — comprising $1,700 in GST Credits⁵, $790 in U-Save rebates, about $340 in S&CC rebates, $1,200 of PSEA top-ups, and $200 of property tax rebates for 2008 and 2009. Add it all up, it comes to six years’ worth of the GST increase in the case of this family. In addition, on an on-going basis, even after the GST offsets are distributed and over with, this family will be getting ongoing improvement in their standard of living because the wife will qualify for $900 from the Workfare Income Supplement (WIS) scheme and the husband gets an increase in his employer’s CPF contributions as well.

6.20 The GST Offset Package is therefore a substantial one that will help the majority of Singaporeans offset their increased GST costs for several years. Low-income households, in particular, will be well provided for both through the GST Offset Package and the WIS. Even after the GST offsets have been distributed, Workfare will continue to provide significant support for low-income workers on a continuing basis. This is why the GST, combined with the Workfare Income Supplement Scheme, is not regressive. Lower-income workers will end up better because of this — better off compared to before the GST increase and the introduction of Workfare.