Friday, August 19, 2016

GST Carousel Fraud

Many people dislike GST for being a regressive tax, which imposes a heavy burden on low income people.

I have a separate issue. I found it to be a wasteful taste. It creates too much unnecessary work and waste for businesses. They have to pay the GST on what they buy and then reclaim their GST when they resell the goods.

If a consumption tax has to be imposed, it is better to impose it at the final point of sale, rather than at all the intermediate points. I described GST as a "bits and pieces" tax.

I now find another reason to dislike this wasteful tax. Some people have taken advantage of its weakness to create the carousel fraud. It is described here.

Some people may be caught. But how many people get away with this kind of fraud or similar evasive activities? We will never know.

It is time to review the GST and find a better way to collect revenue without imposing unnecessary cost to businesses. Already, the cost of doing business is too high in Singapore.

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