GOODS AND SERVICES TAX (Progress report on implementation)

[Mr Speaker in the Chair]

Mr Robert Chua Teck Chew asked the Minister for Finance whether he will give a progress report on the implementation of the Goods and Services Tax and what is the impact of the GST on the economy and the different business sectors.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, on the whole, the implementation of GST since 1st April 1994 has progressed very smoothly, considering it is a new tax with a very comprehensive tax base. There were, of course, some minor hitches in the initial stages of implementation due primarily to unfamiliarity of traders with new procedures introduced as a result of GST. However, teething problems encountered were resolved quickly. For example, based on feedback from traders, the requirement for outward permits to be taken out prior to export of goods was done away with on 1st June 1994. I would therefore like to assure the House that the Ministry of Finance, the Inland Revenue Authority of Singapore and the Customs and Excise Department will continue to hold regular dialogue sessions with the various Chambers of Commerce, the Institute of Public Accountants and various business associations to monitor and resolve any teething problems that may arise.

As GST has only been implemented for three months, it is premature to assess its overall impact on the economy at this stage. Nonetheless, preliminary indications are encouraging. The Consumer Price Index (CPI) rose by only 0.5% between the months of March 1994 and April 1994, and by only a total of 1.5% between April and June 1994. The year-on-year increase from April 1993 to April 1994 was only 2.9%. Although the year-on-year increase for June 1994 of 4.1% was the highest since the implementation of GST, Government still expects the overall inflation for this year to remain within the range of 4.5% to 5.5% forecast earlier.

Trade figures for the months of April to June 1994 also indicate that the implementation of GST has not hampered our trade with the rest of the world. Between the months of April to June 1994, total value of our imports amounted to about $37.6 billion, up by about 8.4% from $34.7 billion over the same period last year. The fact that trade has not been affected by the implementation of GST is probably due to the various schemes implemented, such as the Major Exporter Scheme and the Bonded Warehouse Scheme, to help alleviate possible cash flow problems traders may face as a result of GST.

The implementation of GST is still in its infant stage. The Ministry of Finance will continue to monitor its implementation and impact on the economy in general and specific business sectors, in particular, to see what procedures could be improved or fine-tuned, where necessary.

Mr Robert Chua Teck Chew (Nominated Member): Sir, would the Minister be able to tell us about the impact of GST on the retail sector? Does he have any figures or information?

Dr Richard Hu Tsu Tau: At this stage, we do not have. Collecting that data is not easy and it is difficult to see any way for the first three months. I think we will have to wait for six months or a full year's implementation before we produce any figures of significance.