SINGAPORE — An advisory letter sent by the Inland Revenue Authority of Singapore (IRAS) on the impending 1 per cent hike of Goods & Services Tax (GST) from 1 Jan 2023, advises businesses not to misrepresent to consumers by attributing any price increases primarily or solely to increase of GST.

The letter was allegedly sent to managers in the Food & Beverage industry on Monday.

It writes, “Some businesses have been observed to be increasing prices or service fees to account for the additional 1% GST rate increase and also to take into account higher raw material and overhead costs, but have attributed the increase primarily or solely to the increase in GST.”

And adds, “Ahead of the increase in GST rate, the Government would like to remind businesses to be transparent in communicating the reasons for any price increases to consumers. Businesses should explain the main reasons for the increases in price/fee increases, and not misrepresent the situation to consumers by attributing the price increases primarily or solely to the increase in GST.”

The 2 per cent tiered hike of the GST from 7 per cent to 9 per cent was passed in Parliament by the People’s Action Party Members of Parliament, with the Workers’ Party (WP) and Progress Singapore Party (PSP) objecting to it due to the impact it has on the population.

PAP ministers have defended the need for the GST hike so as to have sufficient revenue to cater for future expenses while WP MPs and PSP NCMPs have suggested alternative sources of revenues and to dip more into the earnings from the reserves — which slows down the growth of reserves and not touching the principal sum.

The hike in GST has generated a lot of unhappiness among the Singapore population and dissatisfaction against the Singapore Government and the ruling party.

IRAS, on its website, warns against unjustified price increases by companies using GST as cover and highlights the presence of the Committee Against Profiteering (CAP) which investigate feedback on unjustified price increases of essential products and services that use the GST increase as a cover.

“If a business raises its prices, it is not acceptable for the business to use the GST increase as the reason for raising prices before the GST rate change, nor is it acceptable for a business to raise prices by more than the GST increase after the GST rate change, citing the GST increase as the reason.” states IRAS.

In a written reply to a parliamentary question on Tuesday (2 August), Minister of Trade and Industrt Gan Kim Yong said that the CAP received and reviewed about 100 feedback submissions between April and July 2022. Of them, five involved specific allegations of GST misrepresentation.

“The CAP followed up swiftly, especially for the five cases, working with partner agencies and organisations including the Competition and Consumer Commission of Singapore (CCCS), the Consumers Association of Singapore (CASE) and the People’s Association (PA). The businesses committed to be transparent on their pricing and in their communications with consumers,” Gan said.

“There have so far been no repeat complaints.”


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