ST Forum 4 August 2007
Why Water Conservation Tax is not like COE
IN HIS letter, 'Is Water Conservation Tax fair? Ask Iras' (ST, July
2
, Mr Karma Tsultrim Wangchuk suggested that the
Water Conservation Tax (WCT) should not be subject to GST. We thank
him for this opportunity to clarify the policy on GST.
GST is a tax on the final value of goods or services supplied in
Singapore. Taxes and duties that are related to the supply of a
good or service - for example, tobacco duty, liquor duty, betting
and sweepstake duties, and WCT - form part of the final value of
the good or service. GST is thus imposed on the final value,
inclusive of such taxes and duties. This is also the practice in
the United Kingdom, Australia and New Zealand.
Charges that have no relation to the supply of goods and services
do not attract GST. For example, the Additional Registration Fee,
Certificate of Entitlement (COE) and Registration Fee are imposed
on the registration of a motor vehicle, and not its supply.
Similarly, Road Tax is imposed on the ownership of a vehicle. It is
possible to sell a car without paying any of these registration or
ownership charges, provided the car is not registered for use on
public roads. Hence, GST is not imposed on them.
We thank Mr Wangchuk for his feedback.
Harvey Koenig
Deputy Director (Tax Policy)
Ministry of Finance
--------------------------------------------------------------------------------
THE RATIONALE
Charges that have no relation to the supply of goods and services
do not attract GST. For example, ARF, COE.
Latest comments
What is the definition of "supply" then? Because the water that we
use has to be "supplied" (distributed) through water pipes, it
therefore attracts GST? Or else, we can purify it ourselves from
rainwater or the reservoir (and in the latter case, then we'll just
be charged for the purification, not the WCT)? I'm sorry, but I
cannot follow the (lame) logic here.
Posted by: unewolke at Sat Aug 04 08:19:39 SGT 2007
I still don't understand - the WCT is obviously a tax, but now it's
disguised as forming 'part of the final value of the good or
service'. I can understand the rationale for the WCT, but the
current practice (and merely saying that the same practice exists
in the UK, Australia and NZ as well is just herd mentality) does
not explain why it is against the general principle of not taxing
taxes. And incidentally, so what if the practice exists in the UK,
Australia and NZ? Because we are part of the Commonwealth???
Posted by: unewolke at Sat Aug 04 08:15:28 SGT 2007
All I can see is double taxation 