Senior Minister of State for Finance Chee Hong Tat set the record straight on why some retailers are absorbing 1 per cent of GST in a frank Facebook post this morning (Jan 10). Here are the facts:
I am puzzled to read Assoc Prof Jamus Lim’s Facebook post on the 1% GST absorption discount offered by some supermarkets and retailers.
Assoc Prof Lim claimed that the discounts are what he and Ms He Ting Ru had suggested in Parliament. This is factually inaccurate. What he and Ms He had proposed was an exemption of GST by the government for what they deemed as “essential goods”, and not about retailers choosing to temporarily absorb the GST increase on their own accord.
DPM Lawrence Wong had previously explained why GST exemption by the government for “essential goods” is ineffective in practice. Other countries that have tried this have encountered numerous difficulties, as the line between essentials and non-essentials is often ambiguous and unclear, e.g. rice may be considered as an essential staple but not when it is part of an expensive sushi dinner. What’s more, an exemption for essential items will benefit the well-to-do more, because they spend more on their purchases, including on essentials.
Learning from these experiences, we have developed our own distinctive GST system in Singapore – one that is fairer and more effective. Through the permanent GST Voucher Scheme, lower-income households pay a much lower effective GST rate than higher-income households.
Additionally, through the Assurance Package (AP), we have delayed the GST increase by more than 5 years for the vast majority of Singaporean households.
Contrary to what Assoc Prof Lim claimed, the Government is open to the idea of retailers absorbing the GST increase if they choose to do so. This is different from what the Workers’ Party had suggested in Parliament. In fact, it was Mayor/ MOS Low Yen Ling and her Committee Against Profiteering (CAP) members who have been tirelessly engaging supermarket chains and merchants to offer discounts and other offers. This behind-the-scenes work is what benefits our people, through concrete actions and outcomes.
Source: Low Yen Ling / Facebook
Assoc Prof Lim claims that several merchants are making use of the GST hike to increase prices across the board. He should provide details of these merchants to the CAP, so that it can investigate and take action against any errant businesses seeking to profiteer from the GST increase. Importantly, Assoc Prof Lim should not misrepresent the debates in Parliament and claim credit for what others have done. That is disingenuous and misleading. While we welcome different points of view on public policy, we must ensure that our political discourse and debates are conducted with integrity and honesty.