July 1st is a significant day. Yes its Terrence's bday. Happy birthday =)
But its also the day when Singapore's GST goes up to 7%!

Yes! Prices have already gone up! Inflation! I went to KFC today. Noted that the prices have all been upped. Seems like not every producer will be absorbing the rise in prices. While Singapore Press Holdings are absorbing the rise in costs, KFC is passing the tax burden down to consumers.

We will probably be expecting a slight inflation in prices, though the government is providing cash incentives to both SMEs and the general population to cope with the 2% GST hike.

If you read the news today, you would note that many people have decided to purchase lots of expensive goods before the GST hike to avoid paying the extra 2%.
It seems like an expectation of rising prices would prompt an increase in consumption level.

But hey. This 2% GST hike is deterimental to us students. Prices have inflated, but not all our allowances have. Effectively, we now have a lower disposable income. Since wages have risen for most occupations to balance up the purchasing power, shouldn't it do the same for us? Haha.

Alright. I don't really understand the intention behind the 2% tax hike, but I am unsure if it was really necessary. Like the government said, they don't need the money. So they shouldn't have destabilised prices in the first place. After all, consumers always suffer most from the tax incidence. The increase in wages definitely will not apply to every employed personnel since some greedy firms will want to take the benefits from the government for themselves - those that the government provide to facilitate a firms with the rise in prices.

Yea. Definitely disadvantageous to the general population. Even though Singapore is clocking the highest growth rate in the world, it doesn't mean the whole population is getting richer. It only means the rich are getting richer and the poorer are getting poorer. It always seems that way. This is widening the income gap, not reducing it.

According to the government, the purpose of the tax hike is such that the government will receive sufficient expenditure to spend on helping the poor.(Ref) But ironically, the tax hike will make the poor poorer. Unless they take the money, then start giving it out to the low income population. Then, I will agree with that. But for now, inflation!


On another note, at KFC today, I noted a lot of negative externalities coming from this guy in front of me in the queue. He gave very confusing orders, kept changing his orders, and ordered a bulk of food, thus slowing the queue to a standstill. The queue beside us had finished serving about 3 to 4 customers before the guy in front of me was done! Don't he know it will cause market failure? Lol.

Anyway. I promised not to explicitly name the guy on my blog, but only to identify him as MK, and that he plays chess. Its very discreet, isn't it? =))