GOODS AND SERVICES TAX (Suspension)

Mr Goh Choon Kang asked the Minister for Finance if he will consider suspending the collection of Goods and Services Tax in view of the worsening economic situation.

The Minister for Finance (Dr Richard Hu Tsu Tau): Mr Speaker, Sir, the current economic situation is due primarily to a fall in external demand as domestic demand accounts for less than 30% of total demand. As our GST rate at 3% is already very low, suspending GST is unlikely to affect domestic demand significantly. Suspending GST would also result in a revenue loss of about $2 billion a year. Even if we need to stimulate the economy by $2 billion a year, the money would be better spent in helping specific groups and areas rather than by lifting the GST across-the-board.