Hong Kong - No GST!!!

Our budget for 2011 is supposedly designed by the government to be an enticing bag of goodies specifically intended to sweeten the ground before the impending general elections. It is akin to the carpet bombing of the enemy terrain before the ground troops are called upon to claim the final victory for the incumbent. Of course, the analogy is not totally correct as the humans residing in the terrain are not exactly the enemy of the incoming troops. In fact, it would be uncontentious to claim that more than half are friends instead.

Thus, it came as a embarrassing surprise that our closest competitor with a physical and demographic profile akin to ours recently announced a much more generous packet of "ang pow" for their citizens. To be precise, it is an outright cash grant of about $6000 HK dollars to every adult individual more than 18 years to combat the rising inflation . On top of this, there are various rebates given to income earners to lessen their tax burden. You have to bear in mind is that all this is done without the consideration "to sweeten the ground" as there  are no impending elections to talk about in Hong Kong in 2011.

You may want to ask - why is Hong Kong government able to be so generous unlike our PAP government, despite the iron-clad fact that our ministers and high-rank civil servants are paid much more to deliver the goods to its people.

Ther clear answer lies in the simple observation that there a a large hole (in fact the largest) in our expediture allocated in the name of national security and sovereignty to defence. This rather obscene sum take up about 28% of the overall government expenditure every year.In 2011, the exact sum is slightly more than $12 Billions. This is the fodder that goes to acquire the fighters, frigates... and also to provide a very luxurious income for the senior officers in the SAF. A number of related GLCs, in particular ST Engineering are kept fed and well taken care by this defence budget. As a matter for comparison, despite the hoo-ha and controversy surrounding the GST, which account for all the spending related tax we have, it amount to $7.9 billion. Not forgetting that the GST rate is now at a rather elevated 7%, it is difficult to see how to grow it further unless consumption increases further. If the rate goes higher, I shudder to predict the trajectory of the people's response.

In Hong Kong, defence expenditure is close to ZERO. So in Singapore, everyone - young or old, employed or unemployed, retirees or not is subsidizing the SAF and its affiliated organizations directly or indirectly to keep it operational and updated. However, it is still a very much an untested elephant.

For me, it means the Singpore will always remain uncompetitive vis-a-vis HongKong at a fundamental level in terms of optimising our human and financial resources.