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Why there’ll be no GST rise until after next GE

In Economy, Political governance, Public Administration on 11/09/2020 at 7:29 am

The govt will take steps to strengthen its revenue position like raising the Goods and Services Tax (GST), said PM in waiting Heng Swee Keat on Friday (Aug 28).

I’m sure he knows -that

[T]wo ill-timed increases in the consumption tax, in the name of fiscal probity, both of which pushed the economy into recession.

Economist on Abe’s legacy

So that’s why maybe Heng also said the govt will “carefully monitor” the timing of such moves by considering the state of the economy and spending needs. “Carefully monitor” is his get-out-jail card of being the public face of Pay And Pay.

I mean with the next GE scheduled by end 2026, a recession in 2024 induced by a GST rise in 2023, is a vote loser. The way the economy is tanking (6% contraction expected), GST can only be raised in 2022 (Economy forcasted to grow by 5.5%) at the earliest. But based on the Japanese experience doing it then is risky. That leaves 2023 and, in turn, carries the risk of a recession in 2024.

Any later than 2023, the PAP is dicing with only 51% of the popular vote in the next GE.

And anyway, fiscal tightening should be resisted until recovery’s well underway: not to be nipped in the bud by a Hard Truth that was BS in the first place.

Casting my Chine fortune sticks, I prophesie that there’ll be no GST rise before the next GE. PAP knows the trade-offs and being Mr PAY And Pay could mean that its share of the popular vote falls below the pass mark: 60%.

In the context of a 60- 61% share of the popular vote being mud in the eye for the PAP, anything less than 65% will be seen as less than a smooth transition by the PAP and the voters.

Why PAP aiming for 65% of the popular vote

Related post: How the PAP plans to fix its legitimacy problem.

And remember I predicted this before the analysts: Double confirm: No GST rise this yr.

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  1. There’s gonna be a big GDP increase in 2021 when a couple of vaccines are rolled out. As this is a health crisis induced recession, take that away & things can recover quicker than most expect. PAPies gonna use this to increase GST by 1% by end-2022 and another 1% in 2023. They will dangle lots of ang baos for the masses to ease the pain, & the 2 years buffer to the next GE will dull the memory. Sinkies have attention deficit disorder.

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