Singapore's Goods and Services Tax (GST) will be raised from 5% to 7% on 1st July 2007. From the same day, the Government will hand out a GST Offset Package which is a "set of comprehensive measures to help Singaporeans with the increase in GST, with more for lower-income Singaporeans". For my wife and I, we both get $200 help each. (Thanks for the implied compliment from the Government that we are not that poor but the reality is we are not very rich either.)
Theoretically, a $200 handout means that we can afford to spend more than $10,000 each after 1st July 2007 before wiping out the Government handout ($200 is 2% of $10,000). Now $10,000 sure sounds like a lot of money. However in practice, we would have used up the handout much sooner. Let me explain why.
A few months ago, Ya Kun Kaya Toast increased the prices of its drinks and toasts by at least 10 cents all round - about 10% increase.
A Sausage Egg McMuffin from McDonald's is now $3.50 instead of $3.10 before - about 13% increase.
My favourite popiah sold at a stall in a coffeeshop in my neighbourhood now costs $1.20 instead of the usual $1.00 - a 20% increase.
I don't earn very much, you know?
Perhaps most outrageous of all is that a can of Milkmaid condensed milk now costs $1.60 instead of $1.10 - a whopping 45% increase!
Granted, costs of labour, materials and overheads might have gone up but why must prices always be adjusted by at least 10% or more everytime? What I find hard to accept is the Milkmaid supplier's claim that the milk now "has more calcium in it", implying that the price increase is justified. Gee, I don't need more calcium, just give me back my old milk and charge me the same price for it.
I have yet to see a price increase that is limited to just 2%. The above are just 4 random examples which I quoted. There are probably dozens of other products which have their prices increased recently as well. Mind you, the above increases were effected even before the new GST rate kicked in. At this rate, you bet even bitter medicine is going to cost more. So it is better that you take it only once instead of twice (even though that might have been your preference in the first place).
Sorry, I don't mean to be rude but if you are a businessman and are putting up new prices for your products because of the impending GST increase, have you upped yours yet?