If you’re like BuffLord95, you’d think that the GST Voucher scheme (and its payout) is meant to cover the cost of the GST hike, or worse, to be given out before elections.
Reader Bao: It isn’t?
Seems like many of our readers are BuffLord95s.
You’d have heard of it, and some of you would’ve once received some cold, hard cash from this scheme. But do you know that it’s actually a permanent scheme, and there are three parts to it?
And it’s certainly not given before elections—in fact, they’re given to you every year.
With the next payout coming soon, here’s everything you need to know about the GST Voucher, simplified for you.
If you prefer to watch us talk about it instead, check out this video (and remember to subscribe to our YouTube channel, please?):
Still here? Well, here you go.
GST Voucher is Used to Offset GST, So Why Not Just Remove GST Altogether?
You should know what GST is. But do you know that GST voucher is a scheme that started way back in 2012?
It’s actually a system to help lower-income households so that they won’t be affected by the cost, not the hike, of GST.
You see, the authorities want to help lower-income families to pay less GST, but they cannot just remove GST on certain things.
So the authorities went for the next best solution: giving money to lower-income families to offset the GST.
The logic is simple: a rich person would buy more things, and therefore pay more GST. That would be more revenue for Ah Gong, whereas a person who earns less would buy fewer things and therefore pay less GST.
If we remove GST on daily necessities, it’ll benefit the rich person since he’s usually spending more, and Ah Gong will receive fewer taxes, too.
The easy solution is to get the NTUC FairPrice cashier to ask for your pay slip whenever you buy something, so that the lower-income families won’t need to pay GST (or less GST) while GST is still being charged to the wealthy.
But obviously, that can’t be done.
So giving money to the low income to offset the GST becomes the best solution.
However, it’s not just cash that lower-income families are getting. They actually come in three forms: cash, utilities bill rebates and MediaSave.
Three Ways to Offset GST
The first is something we’re familiar with: Cash.
This will be paid in August each year, and the amount ranges between $150 to $300. To qualify for it, you need to
- be a Singapore citizen, residing in Singapore
- be aged 21 or above in the year you’re receiving the cash
- have an income of less than $28,000 a year
Also, if you own a property, the annual value of it should not exceed $21,000, and you must not own more than one property.
Simply put, if you live in an HDB and earn less than $2,333 a month, you should be getting that sweet $300. If you live in an executive HDB flat or condo, it might be $150, as the amount you get depends on the annual value of your house.
Secondly, you’d also get rebates for your utilities bill if you live in an HDB flat, which will be given four times a year. On a regular year without COVID-19, you should get between $240 to $400 a year (you’ll get more rebate if you can prove that you have a larger household), and they’ll be credited direct into your utilities account. In other words, technically speaking, if you live in an HDB, a portion of your utilities should have been offset by the GST Voucher scheme since 2012.
By the way, for this year, this rebate, known as U-Save, has been ballooned to between $600 to $800. It can even go up to $1,000 if you live in a 1- or 2-room flat with a large household!
Any unused rebates can be carried over to the next few months.
The third rebate is a MediaSave top-up for seniors. For this, you’d have to be 65, and the Annual Value of your house shouldn’t be more than $21,000. The amount you receive will be based on your house Annual Value and your age:
Obviously Ah Gong is not looking at income here since you should be an Ah Gong or Ah Ma now without any income.
Is This Going to Last Forever?
It’s a permanent scheme, so yes, you’ll get a chance to get your MediaSave top-up even if you’re 22 years old this year.
Last year, the GST Voucher scheme cost Ah Gong $800 million.
But the cost will often be different. For example, there might be more seniors next year, and of course, I won’t need a crystal ball to project that more people would’ve been thrust into the lower-income bracket with COVID-19.
According to the GST Voucher website, they’ve established a GST Voucher fund and will “make further injections into the Fund to carry on financing this permanent GST Voucher Scheme” if necessary.
And if you’re wondering if we’d get more money when GST is increased to 9% by 2025, I’d need a crystal ball for that.