With next GST hike looming, businesses found guilty of profiteering must be taken to task

IT IS just a little over a month before Singapore’s Goods and Services Tax (GST) goes up once again. On the first day of 2024, the consumption tax will be hiked to 9 per cent, the second of a two-step rate increase that began on Jan 1 this year. In the current environment of persistently stubborn inflation and an unprecedented rise in the cost of living, the GST increase – while completely expected – comes at an unwelcome time.

There was some good news this week when FairPrice Group (FPG) announced that its chain of supermarkets will absorb the one percentage point increase in GST for 500 essential items – including rice, vegetables, fresh fruit, paper products and detergent – throughout the first six months of 2024. FPG said that the items covered under the scheme are those that customers buy frequently. It is not the first time FPG has dished out discounts during GST adjustments, having previously done so on three previous occasions.

Of course, not everyone can or will be as generous or altruistic as FPG, but its example is a good one to follow and one that should be praised. As it is, there are already concerns on the ground that some companies could capitalise on the situation and use the GST hike as a convenient reason to raise prices by more than they should.

It is true that many businesses these days tend to adjust their prices upwards because operating costs in general have soared over the past year or so. These include rental, utilities, salaries and materials. While the government has previously said that it does not regulate the pricing decisions of individual businesses, it has also stressed that it is not acceptable for anyone to use the GST increase as the pretext for any price increase beyond the GST rate change.

This is where the Committee Against Profiteering has to come down hard on these errant players, and show that the authorities do not tolerate such behaviour. The committee – which was reconvened in March last year to ensure that businesses do not use the GST hike as a cover to raise prices – is chaired by Minister of State for Trade and Industry Low Yen Ling. Its members comprise business leaders, representatives of business associations and grassroots organisations, and Members of Parliament. The committee must continue to make public those that have been found guilty of profiteering on the pretext of the GST rise, as this will serve as a significant deterrent to others.

On their part, businesses must be more transparent in explaining and communicating the true reasons for any price increases to their customers, and not mislead them by saying it is solely due to the GST hike. It is also in the interest of companies – especially those in the retail as well as the food and beverage sectors – to display their price lists prominently, as this will allow people to compare prices and make an informed decision about whom they patronise. At the end of the day, consumers hold the trump card as they have many options in terms of where to eat or shop, and they will naturally gravitate towards businesses that play fair.