GST Paid by Foreigners Residing in Singapore, Tourists and Top 20% Of Households, and GST Refunds Disbursed to Tourists

11 Assoc Prof Jamus Jerome Lim asked the Deputy Prime Minister and Minister for Finance of the estimated more than 60% of net GST that is accounted for by foreigners residing in Singapore, tourists and the top 20% of resident households, what is the share paid by each group.

12 Assoc Prof Jamus Jerome Lim asked the Deputy Prime Minister and Minister for Finance between 2016 and 2021, what is the Ministry's estimate on the proportion and amount of GST revenue that are paid by non-residents.

13 Assoc Prof Jamus Jerome Lim asked the Deputy Prime Minister and Minister for Finance how much has the Tourism Refund Scheme paid out in GST refunds for tourists between 2010 and 2021.

The Senior Minister of State for Finance (Mr Chee Hong Tat) (for the Minister for Finance): Mr Speaker, may I have your permission to answer Parliamentary Question Nos 11, 12 and 13 together?

Mr Speaker: Yes, please.

Mr Chee Hong Tat: Thank you, Sir. The Ministry of Finance (MOF) has estimated that households and individuals paid around $6.8 billion of the Goods and Services Tax (GST) annually in 2018 and 2019, after netting off refunds under the Tourist Refund Scheme. After further netting off GST Vouchers (GSTV) of over $1 billion provided annually to Singaporean households, the net annual GST from households and individuals was estimated to be around $5.7 billion.

Tourists and foreigners residing in Singapore accounted for around 50% of this net GST, while the top 20% of resident households accounted for close to 20%.

We have not used data for 2020 and 2021, as they are not representative of general consumption patterns due to the impact of the COVID-19 pandemic.

On the Tourist Refund Scheme, from 2010 to 2019, an average of around $200 million per year was refunded to tourists. This works out to just around 2% of total GST collections. The refunds in 2020 and 2021 were much lower, averaging at around $22 million per year, due to travel restrictions associated with COVID-19.

Mr Speaker: Assoc Prof Jamus Lim.

Assoc Prof Jamus Jerome Lim (Sengkang): I thank the Senior Minister of State for the response. Just two follow-up questions. The first is, I am wondering whether the benefit of the additional revenue gain from an estimated, as he had shared, 50% drawn from foreigners and non-residents may actually be worth the additional pain that our middle class will need to endure? I speak especially for our sandwich generation in my constituency of Sengkang, where households who earn sufficiently high incomes nevertheless receive limited support, in terms of support programmes from the Government and continue to face high expenses supporting their children and parents, which will now be subject to a higher GST.

My second question has to do with whether the Ministry has also studied the incidence of the tax. Because, as we know, the burden need not fall on the party which the tax is levied on. To put it another way, the higher GST charges may well crimp demand at the margin, and this may result in Singaporean businesses bearing the burden of reduced demand and hence, lower profits, rather than foreigners paying more, even if it looks like the revenue comes from foreigners. Does the MOF have any estimates of the relative share of GST that will be paid for explicitly by foreign consumers versus local businesses?

Mr Chee Hong Tat: Mr Speaker, the first question from Assoc Prof Jamus Lim – if I understood him correctly – because I shared earlier that 50% of the net GST is borne by foreigners and tourists, he asked whether that GST collection is worth it – if I understood him correctly.

Sir, we have explained that if you look at the package that we have designed, due to the support package and due to permanent features like the GST Voucher, the bulk of the net GST that the Government collects is borne by two groups of people. If you look at the total amount, 50% comes from tourists and foreigners residing in Singapore and about 20% comes from the top 20% of households.

What this means is that the remaining 30% is spread over the rest of the 80% of households and individuals. So, yes, there will certainly be some part of the net GST that is paid for by different groups of society, different income quintiles, including the middle-income and the upper middle-income. So, if you look at the middle 40th to 60th, and also the 60th to the 80th, certainly, I think they do bear some of the GST. But the impact of the GST that they bear is not the full amount. The bulk of the net GST that is collected is borne by foreigners and the top 20% of households, and the remaining 30% of the net GST is spread over this remaining 80% of households and individuals.

In addition to that, Sir, we have also shared earlier that we provide support, to include the middle-income households. So, the support that goes to lower-income households is a lot more because they are more vulnerable and they are more affected by price increases. But in designing the support packages, what was announced in Budget this year and the two packages of $1.5 billion each, we did not leave out the middle-income. In fact, part of those packages included the middle-income.

And there were some parts of the support package that were not means-tested. All were designed such that people who stay in private properties or who earn higher incomes – those who I believe would belong to the middle class and upper-middle class that Assoc Prof Jamus Lim spoke about – they would also be included. For example, the special payment that would be given out in December this year, 2.5 million Singaporeans will benefit.

Sir, for the second question that Assoc Prof Jamus Lim asked, the figures that I shared earlier, including the percentages, were not based on theoretical analysis but are based on actual data. So, what I shared with Assoc Prof Jamus Lim earlier were based on what we had actually collected in 2018 and 2019.