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Wednesday, February 21, 2018

GST TO INCREASE TO 9%, WHAT SHOULD YOU DO NOW?


Dear readers, yes, finally, the government announced that it would increase GST to 9% between 2021 and 2025 as per the Budget Speech delivered by Finance Minister yesterday. While many of us would have already picked up the clues prior to the Budget Speech of an increased GST, I think not many of us would know the exact quantum of GST increase as well as the timeframe of implementation. Hence it is with great relief that we all know that yes GST will increase by 2 percentage points and that the implementation will only start between year 2021 and 2025.
So definitely the GST hike means that Singaporeans have to fork out more for the same consumption. To illustrate, if you have a budget of $100 for a nice meal outside, inclusive of the current 7% GST and 10% service charge typical of many restaurants, the total order amount for the meal must be no more than $84.96: that means that you can order meals totaling no more than $84.96. With the proposed 9% GST and assuming the service charge remain the same at 10%, this order amount becomes $83.40, that means that you should order $1.56 less worth of meals if you need to adhere to the same $100 budget.

Of course, the above example is just for a relatively small consumption, the more and higher priced one consumes, the more GST one has to pay and hence the effect of a larger GST will be felt more.

From now to the date of the actual 9% GST implementation, perhaps folks who would like to spend less on GST (notwithstanding the GST hike) may want to explore how they could cut down some of their consumption habits and behavior. I believe there is sufficient time to do so in view of the proposed timeline for the 9% GST implementation. Join the emailing list to receive regular Financial and Singapore stocks newsletters too! Like" me on Singapore Stocks Investing Facebook page to receive all posts on your Facebook as well as read more articles. Follow me on Twitter too.

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