06 May 2002
NTUC co-operatives will absorb GST increase on basic necessities for one year
When the Goods and Services Tax (GST) increases from 3 to 5 percent on 1 Jan 2003, NTUC Fairprice, NTUC Foodfare and NTUC Healthcare will absorb the increase on basic necessities for up to one year.
"This helps cushion the impact of the GST increase on Singaporeans," said NTUC Secretary-General Lim Boon Heng when he announced this at a closed-door dialogue session with grassroots leaders this morning. Mr Lim was a panellist at the dialogue session organised by the People's Association held at the Orchid Country Club.
Mr Lim said, "NTUC understands that workers will be affected. People buy their basic necessities from the supermarket. Many of us eat regularly at food stalls and hawker centres. Those who need long term medication for ailments such as diabetes or heart conditions too will feel the impact. This is why our supermarket, food court and pharmacy co-operatives have decided to step in."
NTUC FairPrice will absorb the 2% GST increase for a basket of 400 essential items for one year. This is expected to cost FairPrice up to $6 million. Additionally, FairPrice will continue the price subsidy for these 400 essential items. In August 2001, FairPrice launched 400 Everyday Low Price items to help Singaporeans cope with the economic recession. FairPrice has committed to holding prices of these items until December 2002. In view of the GST increase, FairPrice will extend the price subsidy for these essential items for as long as it can. This is estimated to cost FairPrice another $11 million for one year. FairPrice is Singapore's leading supermarket retailer with a network of 66 stores island-wide.
Unity NTUC Healthcare will absorb the 2% GST increase for prescription and over-the-counter medicinal products for one year. It will also maintain the price for its range of 50 UNITY Generic items for one year. These generics are good quality substitutes to commonly used branded items such as Panadol. They represent substantial savings of up to 92% as compared to popular brands. The total savings to the customer is expected to be $300,000. NTUC Healthcare operates a network of over 30 Unity pharmacies in Singapore.
NTUC Foodfare will absorb 2% increase in GST for six months. Foodfare will not adjust the price at beverage counters, food stalls and snack kiosks operated directly by Foodfare. For stalls rented to other food operators, Foodfare will absorb the GST on the rentals and ask the operators to maintain the prices. It is confident that at least half of its food operators will be supportive. The relief package will cost Foodfare about $300,000 for six months. It will be reviewed for possible extension for another six months. NTUC Foodfare operates 25 food courts, coffeeshops and franchise food stalls in Singapore.
The total cost of NTUC's GST relief package is $17.6m.
When GST was first implemented on 1 April 1994, NTUC co-operatives absorbed part of the tax. NTUC FairPrice did not charge the 3 per cent GST for two months and maintained prices for many essential items. It absorbed about $11 million in total during the first year of GST implementation.
"In 1994, NTUC Fairprice did not charge GST for two months. This time, we decided to absorb GST increase for the 400 basic necessities, but for a much longer period of one year. This is more meaningful and helps Singaporeans effectively. It focuses on the basic necessities and helps those most in need for a longer period of time. This package costs us more than 1994," said Mr Lim. "By taking the lead, we hope that other retailers will follow. They too can play their part to cushion the impact of GST increase. We will monitor the situation and extend the package should the need arise," Mr Lim added.
