NTUC FairPrice to absorb GST hike
By Wong Siew Ying, Channel NewsAsia | Posted: 16 February 2007 1955 hrs

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SINGAPORE: Singapore's largest supermarket chain, NTUC FairPrice has committed a $5.5 million relief package to cushion the impact of the increase in Goods and Services Tax (GST).

The GST will be raised by two percentage points to 7 percent from July 1.

FairPrice's announcement comes a day after the government unveiled a S$4b GST offset package to help Singaporeans cope with the higher cost of living.

FairPrice will absorb the GST hike for six months.

But this will only apply to 400 essential items.

Out of the 400 essential items, FairPrice says 80 per cent are food products while household items make up 20 percent.

Altogether, the items constitute about 20 percent of the supermarket's total sales.

The GST absorption will cost FairPrice some $4.5 million.

FairPrice has over 200 outlets.

Separately, FairPrice will also give out $1m worth of vouchers to help needy families.

Details of its implementation are still being worked out.

But FairPrice says one distribution channel is through town councils and the grassroots, who will know which household needs the vouchers most.

When the GST was first implemented in 1994, FairPrice had also absorbed the tax on all items for over one year.

All in, the past few GST absorption exercises had cost FairPrice some $20m.

FairPrice's latest initiative is among the labour movement's $6.1m Care Package.

Its cooperatives NTUC Childcare, NTUC Foodfare and NTUC Learning Hub, will also take steps to absorb the GST increase.

Meantime, the Singapore Retailers Association (SRA) says the timing of the GST hike is not ideal as it runs smack in the middle of this year's Great Singapore Sale which falls between May 25 and July 22.

The SRA says it will be operationally taxing for retailers to adjust prices and re-tag products during their busiest period.

It says the offset package will put more money in consumers' pocket, but whether it will benefit retailers is anyone's guess.

"If you are going to spend on big items, then it's not going to help very much. I guess most people would be concerned, just being careful with their spending," said a member of the public.

"I don't think the GST is going to affect me very much, but any help the government is willing to give is always welcomed," said another.

"The package will be sufficient, but I never thought of how to use it yet. Probably, I save it for my children," said a third member of the public.

Still, the SRA feels the full effect of the GST increase will only come on stream after the Great Singapore Sale. - CNA/ir