Goods and Services Tax (GST) is a pay-as-you-consume tax.
So if I were to buy anything ie. anything until the day I die and buried, part of my cash is actually going to the government coffer.
Even if I were to buy from a non-GST registered retailers, he/she would charge a price that would cover the costs of its raw materials etc etc. As most of what we consumed are imported, GST is levied on these imports as they leave the ports.
All my expenses during my retirement will be funded by savings I am accumulating since I started work. These savings are derived from after-income-tax income.
Tax and tax on the same income?
Let say my income tax bracket is 10% and GST is 7%. I assume I spend every cent of my disposable income after tax. Let’s say, my annual income is $100,000.
$90,000 would be my after-income-tax income. 7% of $90,000 is $6,300.
I would have paid $16,300 in taxes for $100,000 income ie. 16.3%.
While this illustration is taking to the extreme, it serves to illustrate the importance of looking at your total tax burden over time.
I was looking forward to my retirement. But now I have to work harder as I have to protect my savings against normal inflation rate + a factor of GST.
So it now look that I will pay GST until all my funeral expenses are paid from my estate.