No major hiccups on day one of GST

SINGAPORE – Singapore’s first day with the Goods and Services Tax (GST) proceeded without any major hiccups.

Speaking at a press briefing at the Woodlands Customs checkpoint yesterday, Finance Minister Richard Hu said the GST has been smoothly implemented

Dr Hu added that the Government will continue to monitor the situation for the next three to six months, although he does not expect many teething problems.

The minister had earlier visited People’s Park and the Inland Revenue Authority of Singapore (IRAS) office in International Plaza to get a feel of the situation and to gather feedback on the GST.

Dr Hu said the Government’s relationship with businesses will be especially important in the GST’s case, as it will be the merchants who will be collecting the tax.

He encouraged businesses to absorb the GST where possible during the first year. He said the next nine months will be particularly sensitive to price changes.

He praised the firms in People’s Park which have rounded down their prices to the nearest five cents to avoid hassles over one-cent coins.

During his visit, representatives of shopping centre’s association of traders pledged not to raise their prices because of the GST.

The finance minister told the briefing that the inflation rate is likely to increase by three percentage points to 5.5 per cent this year as a result of the GST. But by next year, the rate will return to between 2 and 3 per cent.

The minister explained that as the bulk of inflation comes from imports, the effect will be neutralised as long as the Singapore dollar remains strong.

The Government expects to collect $960 million annually from the GST. The offsets for the tax have been estimated at $1.2 billion a year.