Minister of State Says WP’s Claims About 1% GST Absorption by Supermarkets for Essentials Isn’t Accurate

By
Sushmita Kaur
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Senior Minister of State for Finance, Chee Hong Tat officially has beef with Workers’ Party, Jamus Lim.

This is the last thing I expected to type so early into the year but alas, it only took 11 days into the new year to officially have the first political drama of 2024.

Kind of.

The spat began on Facebook when Jamus Lim claimed credit for the idea behind retailers absorbing the GST (Goods and Services Tax) increase.

In response, Mr Chee posted a rebuttal, turning this into a war of words on Facebook.

The Post that Prompted the Drama

On 9 January, Dr Lim made a post on Facebook addressing growing concerns about rising prices in Singapore. He mentioned that many large retailers like Giant and NTUC Fairprice had chosen to absorb the GST increase for essential items such as fresh food and personal care products.

Seems harmless so far, right?

The controversy arose when Dr Lim claimed that he and Workers’ Party MP He Ting Ru had initially proposed this idea in Parliament, but it was dismissed as unfeasible at the time.

He argued that the current actions of supermarkets absorbing the GST hike proved the viability and benefits of their initial idea. Hence, he felt that their “commonsensical” idea should not have been dismissed by the government.

Furthermore, he mentioned that that the residents that he spoke to felt as though the GST hikes increased beyond one percent citing that merchants would take this as an opportunity to increase overall prices.

He stated that a nationwide GST increase results in a disproportionate rise in prices.

Minister of State Chee Hong Tat’s Response

On 10 January, Mr Chee, who’s also the Acting Transport Minister, responded with his puzzlement about Dr Lim’s claims and debunked them. He clarified that the idea of supermarkets absorbing the 1% hike was not Workers’ Party’s suggestion.

Dr Lim had referred to an argument he and Ms He made in Parliament during the Budget 2022 debate, which differed from what was actually proposed by Workers’ Party in 2022.

What Dr Lim and Ms He had previously suggested was implementing GST exemptions on essential items like food supplies, healthcare, and childcare, citing examples from countries like the UK, Australia, and Japan. Their goal was to alleviate the burden of the high cost of living.

However, Mr Chee highlighted that Deputy Prime Minister Lawrence Wong had previously explained the ineffectiveness of GST exemptions and the challenges faced by countries implementing such systems.

To put it simply, determining which items are essential for GST exemption would be complicated, and such exemptions would likely benefit wealthier households more than those with lower incomes.

Why is that so?

If lower GST rates are implemented, while it would benefit everyone, higher-income households generally spend more and would overall benefit more from this system.

Hence, the government chooses to provide schemes like GST vouchers to ensure that lower-income households pay a lower effective GST rate, promoting a fairer approach.

You can watch this video to get a better idea of how it works:

Mr Chee also mentioned that, unlike what Dr Lim claimed, the government actually supports the idea of retailers absorbing the GST increase.

Furthermore, he urged Dr Lim provide details of merchants who may be using the hike as an excuse to disproportionately raise prices, so that further investigations could be conducted.

He concluded by stating that “Assoc Prof Lim should not misrepresent the debates in Parliament and claim credit for what others have done. That is disingenuous and misleading,” and emphasized the importance of conducting policy debates with integrity and transparency.

Watch this for a complete summary of what REALLY happened to Qoo10, and why it's like a K-drama:

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Sushmita Kaur
Email: [email protected]