GST COLLECTIONS BY CUSTOMS AUTHORITIES (Discrepancy)

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GST COLLECTIONS BY CUSTOMS AUTHORITIES:

(Discrepancy): 11.

Prof. Ivan Png Paak Liang asked the Prime Minister and Minister for Finance (a) how can the Customs authorities mistakenly combine two months' GST collections into the May 2004 figure; (b) why no one in Customs, IRAS, their supervising Ministry or statistical agencies noticed the discrepancy until much later; (c) why was the May 2004 figure "corrected" by adjusting the March 2005 figure; (d) whether the discrepancy and correction had been announced prior to the Straits Times' report; (e) who are responsible and what action has been taken against them; and (f) what action has been taken to render our statistical collection more robust.

The Second Minister for Finance (Mr Raymond Lim Siang Keat) (for the Prime Minister and Minister for Finance): Sir, the officer who submitted the May 2004 GST figure for collections by Singapore Customs had a computer spreadsheet which showed monthly collections as well as cumulative collections from the beginning of the financial year. She inadvertently picked the cumulative April and May 2004 collections to submit to IRAS. It was a "data translation" error. Thus, she reported the collection for May 2004 as $419 million instead of the correct figure of $211 million, an overstatement of $208 million.

IRAS and MOF did not immediately detect the over-reporting in May 2004, as

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that month's collection did not show any extraordinary increase over the same period in 2003. The total GST collections by IRAS and Singapore Customs amounted to $938.5 million for May 2004. Although this figure was 28.5% higher than the May 2003 collection of $730.5 million, the increase was within expectations due to the increase in GST rate from 4% to 5% on 1st January 2004. Furthermore, import GST is only a part of the total GST collection, which varies widely from month to month due to its cyclical nature. The error was only picked up during an audit in April 2005.

When IRAS was informed of the mistake, IRAS took immediate action to amend the error. The IRAS officer simply reduced the March 2005 figure by the sum of $208 million, instead of reporting the correct March 2005 figure and amending the May 2004 figure. He thought what was critical was to ensure that the overall collection figure for the whole of the financial year would be correct, not realising the importance of correct monthly figures too.

Given the sequence of events, it is plain that the corrections had been done immediately in April 2005, but in the wrong way. I would like to assure Singaporeans that the GST collection in the Government accounts for the financial year 2004/2005 has been audited and correctly accounted for. The reporting errors did not arise from a data system failure but from human errors. The first error by Singapore Customs was a straight mistake of picking the wrong figure from the computer spreadsheet. The second error by IRAS was an error of judgment in the course of trying to correct the mistake by Singapore Customs. While the errors gave wrong figures for the months of May 2004 and March 2005, the errors completely offset each other. The total figure for financial year 2004/2005 was correct.

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There is no question of Singapore Customs or IRAS trying to fudge or cover up their mistakes. In particular, there is no reason for the IRAS officer to try to conceal the error, as the error was neither his nor IRAS'. The Customs and IRAS officers were both diligent and competent officers. They and their agencies have learnt from their mistakes and will be extra careful in future.

Prof. Ivan Png Paak Liang (Nominated Member): Mr Speaker, Sir, in the original Question, I asked whether this discrepancy and the correction had been announced prior to the Straits Times' report.

Mr Raymond Lim Siang Keat: No. As I said, what the officer did was simply to correct the March 2005 figure, without realising that it is important that both monthly figures should be corrected and dutifully announced. He did not do that.

Prof. Ivan Png Paak Liang: Sir, in future, if such a discrepancy arises and the correction is wrong and then it is noticed, would it not be better if this were announced before it was found out by the newspapers? Would it not be better if the Ministry were to announce this than for this to be discovered by the Straits Times ?

Mr Raymond Lim Siang Keat: I agree that they should have done so. The reason why it was not notified was that it was an error of judgment on the part of the officer. He thought that, by just adjusting the figure, the financial year figure would be correct. That is the reason why he did not make the announcement. He thought that that was what he was supposed to do with the yearly figure. I agree that, if there is a mistake, we should notify it, because our national statistics are important and we should ensure that they are as accurate as possible.

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Mr Steve Chia Kiah Hong: Sir, was the Minister informed by the officer of such an adjustment, and did the Minister actually make the decision not to inform the press about it beforehand?

Mr Raymond Lim Siang Keat: I do not think issues like this get escalated to my level. I think this is something which IRAS deals with. But I agree that, as a matter of principle, when there is a mistake, we should notify, so that everybody who uses the statistics knows that there is an error and there is a correction. I agree with that.