SINGAPORE — The Goods and Services Tax (GST) increase, which will begin implementation on Sunday (Jan 1), was one of the biggest items in the news this year.
On Wednesday (Dec 28), Reuters reported that several Singaporeans are trying to beat the hike by going on a shopping spree before January 1, including one man who bought appliances and furniture several months before moving into his new home, placing these in storage at retailers’ facilities for now.
The man told Reuters that by making his purchases now instead of after Jan 1, 2023, he’s saving S$250. “A 1 per cent increment may be small, but any savings help in this inflationary environment,” he’s quoted as saying.
The man also spoke of male colleagues egged on by their girlfriends to propose now, as engagement rings, like many other things, will see a price increase in 2023. However, whatever bump Singapore’s economy enjoys due to the spate of purchases now, this is likely to be offset by fewer people making purchases in the first quarter of next year, economists told Reuters.
And while Singapore’s GST is still lower than Japan’s (10 per cent) and Indonesia’s (11 per cent), or in many European countries, where it’s around 20 per cent, the country is bucking the trend seen in other countries such as Thailand and Italy, where people are being given consumption tax breaks to help them manage higher living costs.
But in Singapore, to offset higher living costs and the GST hike, the government will be issuing up to S$700 worth of vouchers, depending on Singaporeans’ eligibility, which is part of an S$8 billion “assurance package.” The other half of the hike is also not set in stone.
In the case of a major global downturn in 2023, the government has said it will take “careful review” whether to raise the GST to nine per cent, Deputy Prime Minister said in Parliament.
The GST (Amendment) Bill was passed in Parliament last month, despite dissent from the Workers’ Party MPs and the Non-Constituency MPs from the Progress Singapore Party, who have said that it would be burdensome on Singaporeans, especially at a time when costs of living have increased.
In effect, the GST will go up from 7 per cent to 8 per cent from Jan 1, 2023, and from 8 per cent to 9 per cent from Jan 1, 2024. Nevertheless, some are rushing to beat the GST increase, including young people buying big-ticket items before the one-point uptick. Others have already pre-paid for their Chinese New Year dinners to avoid higher GST rates. /TISG