SINGAPORE - The decision by some supermarkets and retailers to temporarily absorb the recent 1 percentage point GST increase of their own accord is not the same as the Workers’ Party’s (WP) calls for the Government to exempt essential goods from the tax, said Senior Minister of State for Finance Chee Hong Tat.
In a Jan 10 Facebook post, Mr Chee said it was factually inaccurate for WP MP Jamus Lim to claim that the discounts were what he and fellow Sengkang GRC MP He Ting Ru had earlier called for in Parliament.
Mr Chee was responding to a Jan 9 post by Associate Professor Lim, who noted that large retailers such as Giant, Changi Airport and FairPrice had decided to absorb the goods and services tax (GST) increase for essentials such as fresh food and personal care products.
Prof Lim wrote: “This was essentially an argument that He Ting Ru and I made in Parliament, but the idea was pooh-poohed as infeasible.”
That some retailers had chosen to do so was “demonstrable proof that it is not only possible, but something consumers want”.
“The decision by the Government to sidestep this commonsensical idea is, in my view, an abdication of leadership on the economy,” added Prof Lim.
In his rebuttal, Mr Chee said that what Prof Lim and Ms He had earlier proposed was for the Government to exempt what they deemed “essential goods” from GST.
During the February 2022 Budget debate, Ms He had called for food items and services such as healthcare and childcare to be exempt from GST, pointing to Australia and Japan as countries that do so.
In November 2022, Prof Lim repeated the call for essential items to be temporarily exempt from GST, or at least the GST hike. He noted that some emerging economies such as India also used differentiated GST regimes.
Mr Chee said Deputy Prime Minister Lawrence Wong had explained why GST exemption for essential goods by the Government is ineffective in practice, and that countries that tried to do so “encountered numerous difficulties, as the line between essentials and non-essentials is often ambiguous and unclear”.
At the November 2022 debate to amend the GST, DPM Wong cited a BBC article about the Indian system, where there was a court challenge by a pizza toppings firm to have its mozzarella topping classified as cheese, which had a GST of 12 per cent.
The court disagreed, arguing that because the topping had other ingredients such as vegetable oil, it should be taxed at 18 per cent in a class known as “edible preparations”.
There is no end to such challenges, said DPM Wong. And while a tiered GST system sounds good on paper, studies by numerous governments and organisations concluded that it ends up benefiting the well-to-do, who spend more overall, including on essentials, he added.
Mr Chee said that contrary to Prof Lim’s claim, the Government is open to the idea of retailers absorbing the GST increase if they choose to do so.
“In fact, it was Minister of State 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,” he said.
He also addressed Prof Lim’s claims that merchants had used the GST hike to “revise prices more generally”. Prof Lim had said a GST increase provided merchants with “sufficient justification” to overcome inertia and raise their prices, “often disproportionately”.
Mr Chee said that if Prof Lim knew of errant businesses seeking to profiteer from the GST increase, he should provide details to CAP so that it can investigate and take action.
While the Government welcomes different viewpoints on public policy, political discourse and debates should be conducted with integrity and honesty, he added.
“Associate Prof Lim should not misrepresent the debates in Parliament and claim credit for what others have done,” said Mr Chee. “That is disingenuous and misleading.”
