The introduction of exemptions for necessities would complicate the proposed goods and services tax (GST) and raise compliance costs for businesses, says a government source familiar with the issue.
Scheduled for release on Tuesday, the consultation document on GST will set out suggestions for an allowance and subsidy approach, rather than granting exemptions on selected goods and services items.
An average family will be entitled to a water charges credit of up to $500 and a $3,000 rebate on rates every year.
In a move to ease the financial pressure on lower income families, the document will propose a one-off relief payment to Comprehensive Social Security Assistance (CSSA) recipients in the first year of the introduction of the tax and an annual adjustment to CSSA payments.
'The upfront, one-off relief allowance is meant to maintain the purchasing power of CSSA recipients in the initial year of GST. The actual amount is yet to be determined,' the source said.
Separately, low-income families not covered by CSSA could, after a declaration of their incomes, be eligible for an additional $2,000 cash allowance.
