Minister Shanmugam and professor Leong are wrong in their GST hike analysis.

Let me explain how to interpret the GST hike.

When the GST increased from 8% to 9%, it was a 1% increment in nominal term but a 12.5% (1/8) increment in absolute term.  Thus, a coffee seller would need to increase his coffee price by at least 15% to defray the GST hike.  Some might even factor in the current inflation and increase the coffee price by 20%.

The severely flawed GST analysis by Prof Leong had stirred many critics and some business owner had come out to debunk Prof Leong.

One importer said that his suppliers had increased their prices by at least 15% and this 15% price increment had corroborated my explanation.

Is the S$800 household subsidy enough to defray the GST hike?

Let's assume that all the business owners are not profiteering from this GST hike and will only do a 15% price hike.

The $800 is only enough to cater for an annual increase of $5333.33 in household expenditures (5333.33 x 15% = 800) or $444.44 (5333.33/12) per month or $14.61 (5333.33/365) per day.

No, we don't need to spend $80,000 in order to wipe out the $800 household subsidy as stated by Prof Leong.

I don't understand why highly educated people can make such a simple mistake.