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GST relief on goods below S$400 likely to go
THAT relief on goods and services tax (GST) that online shoppers enjoy when buying lower-priced goods from overseas? It will likely be scrapped, said panellists at a discussion on Wednesday.
This is because making changes to the GST system is the likeliest and quickest way for Singapore's government to broaden its tax revenue base, they said.
It can also level the playing field for local firms, while making the tax regime here more competitive with those elsewhere, they added.
The panellists were speaking at a discussion organised by The Businesses Times during the Deloitte Singapore Budget 2017 seminar. They shared their views on the latest fiscal budgetary plan unveiled by Finance Minister Heng Swee Keat in February.
Panellists said that it would be likely that the government will lower, or even do away with the GST relief on goods imported by parcel post.
All goods imported into Singapore are subject to GST, except for non-dutiable goods imported by post and worth below S$400. This is calculated based on the CIF, or cost, insurance and freight value of the good.
This may stand in the way for smaller companies here to compete with overseas ones, said Robert Tsang, indirect tax leader at Deloitte South-east Asia at Wednesday's discussion. The small relief that we have on imports will go... we'll have goods and services of small value treated in exactly the same way," said Mr Tsang.
This idea to lower, or do away with GST relief on imported goods comes as Finance Minister Heng Swee Keat said in his Budget 2017 speech that Singapore must strengthen its tax revenue base in a pro-growth and progressive manner.
Mr Heng noted that other countries have adjusted their GST systems to better reflect the increasing volumes of digital transactions and cross-border trade. "We are studying how we can do likewise."
For example, Australia is planning to scrap GST relief for low-value imported goods - those worth less than A$1,000 (S$1,070) - on July 1.
On Wednesday, the panellists agreed that making changes to the GST system is the most likely approach for Singapore for now. This is because, as an indirect tax levied on goods and services, GST is seen as a more stable source of revenue than more direct ones such as income taxes, which fluctuate with economic cycles. "If you have to do your shopping, you have to do your shopping; you have to eat, you have to buy things," said Mr Tsang.
But it would do the government well to also strengthen its direct tax base, and tweaks to the tax system on wealth, such as on property, are likely too, said fellow panellist Song Seng Wun, who is an economist at CIMB.
However it is clear that Singapore will not look to levy a tax on capital gains or inheritance, as the city-state has managed well without such taxes so far, said Deloitte tax partner Rohan Solapurkar, who also spoke at the panel. "My own take is, GST is the only way forward," he said.