While GST affects people who spend more in general, the newly proposed SST affects more on those who spend on higher priced items. The framework of GST targets on those who spend more in general. The more things you buy, the more tax you will be paying as well. Nevertheless, SST are designed to target those who spend on higher-end products. The more higher-end products you buy, the more tax you will be paying. But you won’t be charged if you just buy what you need (i.e. food, medicines and drinks).
Below are a few types of of spenders that most people may fall under. We have to understand how different types of spending habits function to understand how SST may impact different people.
Needs spender
Such spender spends according their needs only. They find no interest on things that they don’t need. They would prefer home-cook and groceries shopping instead of going to a restaurant. Even in event that they need to dine out, they may most probably go for hawker centres. When spending on things that they already have, it will most probably when the original things is beyond repair.
Occasional spender
Occasionally seek for branded products to pamper themselves. Most occasional spender still emphasize on saving. Such spender may most probably set a budget on how much they allow themselves to spend on high-end products every month. They may buy branded products or dine out in a 5 start restaurant every now and then, but they will watch closely so that these expenses are within their budget.
High-end spender
High-end spenders constantly opt for branded products and services whenever they spend. Branded products, restaurants and hotels look more attractive to these spenders. They may be going after the quality and uniqueness of these products and services provided whenever they spend. Higher end products like high powered cars, high functioning phones and computers are mostly not a need.
People who can afford to spend like this are most likely to be either having higher income or are spending almost all their income every month.
So how now?
As mentioned previously, the proposed new SST framework is designed to have proportionately less impact on those who spend lesser on higher-end products. It is therefore expected to benefit the “needs spender” most, followed by “occasional spender” and “high-end spender” respectively. In fact, high-end spender may be paying more compared to the GST framework, due to an increased tax rate from GST 6% to SST 10%.
Thus, if you are more prone to be a high-end spender, you may want to adjust your spending habits accordingly, or spend wisely and only on items that you need.
Such a spending habit can extend to help you monitor and manage your company's financial health too.
TreezSoft cloud accounting
SST impacts extend to the whole nation, regardless whether you are an individual or company. TreezSoft cloud accounting software is SST ready. We have experts on SST and GST to provide professional support services for FREE for all our clients. We will always stay compliance with the government's tax rules and regulations regardless of any changes. Sign up with TreezSoft to minimize the impact of SST on your business.
Find out more about TreezSoft by emailing our support team members at [email protected]
Or sign up for 30 days free trial now at http://www.treezsoft.com/pricing.html