Title: Issues of GST in Singapore

Objectives

1. To test the relationship between errors made in GST Accounting Report and lack of knowledge of users of GST accounting i.e. business owners.

H_o : There is a positive relationship between errors and the users.

H₁ : There is not a positive relationship between errors and the users

2. To study whether the implementation of GST will affect the buying power of consumers.

H_o : Implementation of GST will affect buying power of consumers.

H₁ : Implementation of GST will not affect buying power of consumers.

Literature Review

Singapore has 5.37 million of total population included 3.34 million of citizens, 0.5 3million of permanent residents and 1.6 million of non-residents (National Population and Talent Division, Prime Minister’s Office, Singapore Department of Statistics, Ministry of Home Affairs, Immigration & Checkpoint Authority, 2014). In 2Q 2014, Singapore GDP had grown by 2.4% (LATEST KEY INDICATIONS, 2014). Many countries run their business in Singapore due to thir highly open economy. Singapore government introduced Goods and Service Tax (GST) in order to make Singapore become more competitive than other countries. GST also known as Value Added Tax (VAT) which first introduced in Singapore in 1994. From the beginning the GST start with 3% lower rate and until 2003 was increased to 4%. The Budget 2007 had declared that GST was increased to 7% till now (GOODS AND SERVICE TAX, 2014). GST is indirect tax and only will tax on domestic consumption of good and services when buying goods and services from GST-registered company or import goods which is paid to Singapore Custom. The governments also make a special scheme for tourist that they can claim a refund GST with spending at least 100sgd (GLENN P.JENKINS,RUP KHADKA, 1998).

1) To analyze impact of consumer’s lack of knowledge in GST.

Introducing GST will lead to sustain economic growth because it will increase revenue of government and lower of corporate and personal income taxes. In the meantime, knowledge in GST for consumer is important as will affect undesirable outcome like insufficient to pay GST by some lower income group in turn to affect their cost of living. The implementation GST in Singapore can be regard as a successful case with the complement of political commitment, mass participation and other elements that increase the confidence of country (GLENN P. JENKINS, RUP KHADKA, 1998).

Specifically in tax situation, public acceptance and confidence is importance and essential for the new tax implementation by government due to the new tax reform will cause the public panic because of their perspective on uncertainty of future expenditure. (International Journal of Business, 2014). With the sustain limited knowledge of GST, people will confuse and not be ready for the implementation because according to the pervious result of study, most of the consumers facing uncertainty of GST would increase the prices of goods and living costs in the upcoming future. Public will doubt that GST would tax on the expense instead of the disposable income. On the other hand, introduce GST is to facilitate citizen to saving instead of the spending. (International Journal of Business, 2014).