SINGAPORE: Workers’ Party (WP) MP Jamus Lim and Senior Minister of State for Finance Chee Hong Tat crossed swords on social media, after a post published by the opposition politician on the implications of the recent Goods and Services Tax (GST) hike drew Mr Chee’s ire.
Assoc Prof Lim on Tuesday (9 Jan) highlighted concerns from his Sengkang GRC residents about how prices have gone up seemingly disproportionately to the 1 per cent GST hike that went into effect on 1 Jan. Pointing out that price revisions across the board are not surprising when there is such a large impetus such as a nationwide GST increase, Assoc Prof Lim said:
“Thankfully, there has been some relief. Many large retailers have decided to absorb the GST increase for essentials, such as fresh food and personal care products. This was essentially an argument that He Ting Ru and I made in Parliament, but the idea was pooh-poohed as infeasible.
“Well, the fact that chains like Giant, Changi Airport, and even Fairprice have chosen to do so is demonstrable proof that it is not only possible, but something consumers want.”
He added, “The decision by the government to sidestep this commonsensical idea is, in my view, an abdication of leadership on the economy.”
The post clearly didn’t sit well with Mr Chee, who issued a rebuttal in the form of his own Facebook post the very next day. On Wednesday (10 Jan), the ruling party politician said he was “puzzled” to read Assoc Prof Lim’s post and called his claim that he suggested an absorption of the GST hike for essentials “factually inaccurate.”
Mr Chee wrote: “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.”
Noting that a GST exemption for essentials is “ineffective in practice,” given what may be a blurry line between essentials and non-essentials, Mr Chee said: “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.”
Defending the Government stance as Singapore’s “fairer and more effective” GST system, Mr Chee highlighted the GST Voucher Scheme and the Assurance Package (AP) payouts as examples of how the Government has helped bridge the gap for Singaporean households expecting higher expenses.
Calling on Assoc Prof Lim to name the merchants which are allegedly profiteering off the GST hike, Mr Chee said: “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.”
Censuring the opposition MP for what he perceives to be a case of claiming credit for the Government’s work and suggesting that Assoc Prof Lim has not been honest in the way he put forth his claims, Mr Chee added:
“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.”
Without taking Mr Chee’s name, Assoc Prof Jamus Lim clarified in a new post on Thursday (11 Jan) that the point of his initial post was to challenge “the argument that it is impractical to exempt essential items because of the difficulty in defining necessities.”
Calling this argument a “tenuous” one, he also explained why the WP believes that GST exemptions on essential items ease the burden for people in the middle class. The MP argued that imposing GST exemptions on essentials on a government level is sound as consumers would feel the “pinch of the increase” the most when tax rises, in spite of efforts from retailers to absorb the tax hike.
Alluding to Mr Chee’s point that government exemptions could unfairly benefit the well-to-do, Mr Lim said:
“If there is no GST being charged, then there is no GST burden to be borne by any party, directly or indirectly. There’s no need to putz around with rebates, which the middle classes and above don’t enjoy, anyhow. And since these are essentials that everyone buys, there’s a simple moral case for why everyone should enjoy the relief.”
Referring to the call for him to report errant merchants to the Committee Against Profiteering, the WP MP also said, “Oh, and might the Committee Against Profiteering (CAP) be able to short-circuit this transmission of GST to higher prices? Alas, it is an almost impossible task. The scope of the CAP is limited by the ability to pin a disproportionate price rise to the GST hike, and the GST hike alone.”
Asserting that he “never got a satisfactory answer” as to how the CAP could be expected to distinguish between an opportunistic price rise versus a genuine one, the economist added, “The difficulty is why I believe that raising GST at a time of generalized inflation is foolhardy.”