GST HIKE DATE - THE GUESSING GAME BEGINS
----------------------------------------
Christie Loh
christie@mediacorp.com.sg

WILL it be this month? April? Or as late as 2008?

As mental cogwheels go into overdrive about when the Goods and Services
Tax (GST) hike will kick in, some are studying the taxman's "movements"
for a clue.

Yesterday, the Inland Revenue Authority of Singapore (Iras) posted an
online guide, titled 2007 GST Rate Change, about how traders can prepare
for the increase from the current 5 per cent. The 21-page e-booklet
contains a practical checklist as well as pointers on technical issues
such as invoicing before and after the rise.

Besides the guide, Iras has been holding free-of-charge seminars for
company representatives since last month. These sessions seat up to 220;
all slots for this month have already been booked up. In all, about 3,000
have signed for the seminars so far. Come next month, Iras will also send
every GST-registered trader an updated copy of the guide.

These "signs" emanating from Iras could strengthen the case for those
expecting the hike to take effect soon, said PricewaterhouseCoopers' tax
partner Koh Soo How.

At a well-known spa chain, staff have been encouraging customers to renew
their beauty packages - even if the subscriptions are far from expiring -
in order to "save some money" before GST rises. "GST will go up in
February, right?" said a therapist who believed that GST would rise to 7
per cent right after the Feb-15 Budget Day, when the Government will
unveil the details of implementation.

But in the view of accounting experts, merchants need more lead time.

"Businesses need some time to get their systems in place. It cannot be
overnight," said Ernst & Young's tax partner Yeo Kai Eng. He said the hike
could be implemented in June or July. Any date after April seems
"reasonable" to Mr Philip Overmyer, executive director of the Singapore
International Chamber of Commerce. "What companies mostly have to do is
upgrade their software and readjust their cash flow," he said.

Or is it more than just that? PricewaterhouseCooper's Mr Koh rattled off a
list of things to do, from changing price tags and invoicing systems, to
reviewing of existing contracts and staff education. Jan 1, 2008 might be
more realistic, he said.

Prime Minister Lee Hsien Loong mooted Singapore's third GST rate hike in
November. The consumption tax was introduced in April 1994 at 3 per cent -
almost two years after the idea was floated in early 1992. Subsequently,
the first rate hike was announced in April 2002, before a staggered
increase took effect in January 2003 to 4 per cent and January 2004 to the
current 5 per cent.

This time, there could be a straight 2-percentage-point jump to 7 per
cent instead of a staggered increase, Mr Lee hinted recently.

The fourth hike may show up in two years while the economy is strong, said
Ernst & Young's Mr Yeo. Eventually, GST could hit 10 per cent, a "round
number that is easy to apply", he added.

But while Mr Koh also feels that the consumption tax has more room to
climb, he does not see the next wave coming for at least five years.
"Given that there is such strong negative sentiment in a buoyant economy,
the Government will really have to think twice about raising the rate
again," said Mr Koh.