The Singapore Government can dream on but the GST hike in July will without question affect people's spending habits. And the 1.5% increase in the employer's CPF contribution will not do much to offset it.
Why? Because Singaporeans cannot take home that 1.5% CPF increase, while the 2% GST increase will affect their spending. It's very simple; if there is an increase in prices (as there will be), there must be an increase in take-home pay or you will have to cut back on your spending as your money will not go as far. Very simple right?
So why is anyone even asking if the GST increase will make people cut back on their spending. And why is anyone saying that it won't? All the help from Workfare and the Offset Package will not stop people from cutting back on speading. How do I know this? Because I intend to cut back on my spending, and I don't think I'm alone.