Thursday, February 15, 2007

GST offset package, is the net casted too wide?

My initial reaction to the GST offset package announced in the 2007 Budget was flat. 4 annual installments of $200 (for me) to offset the two percent hike in GST, nothing unexpected really, except maybe many of us thought it would be a lump sum.

But upon greater examination, I think the Ministry of Finance (MOF) got it wrong again. The problem is so blatant, sticking out like a sore thumb, yet the high-flying scholars at MOF can't see it!

Anyone earning $24k - $100k per annum would be entitled to the same GST Credits as me, albeit their home's annual value is on par with mine.

Personally, I think MOF thinks that we are dumb.

The criteria used when giving out the Progress Package was deemed too lenient by purely considering the annual value of one's home, so this time an additional income-based condition is included to make a new set of more stringent criteria. Shrugz. Somebody tell me that is highly useful in sieving out the folks who deserves more financial assistance.

The point is - people don't expect the same level of material comfort, and hence the same assistance to be rendered to one earning $24k per annum and another earning $100k per annum. Although the absolute amount is never an accurate gauge of one's financial well-being, but I would think broadly dividing into just three income groups - (1) < $24k (2) $24-$100k (3) >$100k - is laziness on the part of MOF. Maybe they fear the consequent administrative work should the divisions are more precise.

And what a Budget for everyone! Those earning above $100k will receive a one time GST Credit of $100. 100 / 100 000 x 100% = 0.1%. Do they honestly need this amount of money? Irks me. Are they given a token sum just to show that they are not left out? Why bother when they don't even need it in the first place?

To offer a brief counterproposal at the end, I suggest the following criteria be used:
(1) Annual home value
(2) Income
(3) Number of dependents (children, elderly)

In this way, we can see the financial burden on an individual more clearly and will then be able to more efficiently direct aid at the needy.

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