Studio Five Weddings

How Will The GST Increase in 2023 Affect Your Wedding Plans?

Summary

  • Though most companies are still GST-exempt (whose taxable income is less than SGD$1m annually), the cost of products are not and are subject to the GST increase.
  • There will be another percentage increase that will be enforced in 2024 bringing the total GST to 9% - this will result in many big ticket items whose payment are spread often over a year to be affected (esp for venue, catering)

We have also specially prepared a simple Wedding Budget Planner that you can use to help plan your budget properly. You can download it here!

2023 is like the sunrise after 2 years of COVID-19. It’s warm and sunny once again, but things are about to heat up!

Along with the positive awakening for many industries after nearly 2 years of forced hibernation, the Singapore government announced the enforcement of an 8% tax on goods and services, commonly termed as GST (a 1% increase from the previous 7%) that was to take effect from 1st Jan 2023 onwards. This does not stop here.

GST will be raised by another 1% from 1st Jan 2024 onwards bringing the total tax rate to an all time high of 9%. Additionally, this tax will also now be applied to even small value items bought from overseas (be it physical or online, including online subscriptions).

If you’re asking how this will impact the cost of your wedding, TLDR: Eventually everything has to go up and it will go up. It has to, so we all can keep doing what we’re doing!

"WHY IS SINGAPORE RAISING GST? What is GST used for??"

Singapore introduced the GST in 1994 as a method of indirect taxing. This refers to tax that are ‘choice related’. In simple terms, someone who spends more is taxed more compared to someone who spends less. This is opposed to direct taxing where you are taxed depending on what you earn. In introducing GST, Singapore was able to keep direct taxes (income tax, property tax) lower to encourage savings and investments overall. This helps to keep Singapore competitive economically in the international market. This in turn allows us to keep being employed, enjoy some semblance of a competitive salary as well as enjoy the stability that we’ve been enjoying whilst living in Singapore all these while.

GST is used by the government to fund the operations of running the country (e.g. healthcare, education, public infrastructure, defence, security)

The need to increase tax is justified in the Ministry of Finance’s website to prepare and fund our aging population, access to better early childhood education and increasing complexity in handling threats to our economy.

Even though the increase to 8% and subsequently 9% was announced in 2018, this move was held and eventually enforced only in 2023 onwards.

For a comprehensive understanding of how the new GST for 2023 is to be implemented, check out this concise blog by the team from The Smart Local as well as this informative blog by our friends from Seedly.

“BUT YOU ALL NOT GST REGISTERED COMPANY MAAH, HOW DOES THE INCREASE IN GST IMPACT YOUR PRICES??”

Even though most wedding vendors are still GST-exempt as our annual taxable income is still less than a million dollars (save the venue providers and perhaps the catering companies), nearly all the consumables required to deliver the product for your wedding day are subject to GST!

In the case for a wedding photography and videography company like us, for each individual package that we fulfill, the increase in GST will affect the cost of albums and prints, the media storage devices and equipment, right down to the use of electricity when we edit the photos and videos (this is actually quite a high hidden cost!).

For a short period of time, companies can utilise this thing we call ‘margins’ to buffer the impact of price on the client’s / consumer side but over a long period of time, it will be suicide.

By artificially keeping the prices low during the point of sale, companies may suffer a double whammy in 2024 when GST increases by another percentage point. This happens because most projects are secured on average a year before their actual wedding. Which means, companies will only fully actualise the costs after the wedding date which most probably is in 2024!

Let me paint how NOT INCREASING our prices might affect you instead.

  • We cushion this price increase by eating up our margins
  • We earn little to nothing
  • Our equipments deteriorate over time and in one case may break down during your event, and in another case, since we don’t have the financial buffer to procure replacement either through rental or purchase or even send the equipment for repair, we cannot shoot your event
  • Client claim damages from us causing us to fail as a company and perhaps close down
  • We cannot fulfill the other contracts that we have and go bankrupt
  • When legally bankrupt, you are at the losing end cause legally we can’t pay you back AND you still have to fork out for another replacement vendor

Of course, I am painting a bleak scenario BUT this scenario was not one that was plucked out of thin air. Several companies in the past have gone through this and the ones who ultimately lose out are the clients who suffer and scramble, sometimes, spelling the end of familial ties.

It is prudent in fact that companies raise their prices to account for the rise in GST. Should you be shocked? No. But you should be prepared.

“SO, HOW CAN I PREPARE MYSELF FOR THIS PRICE INCREASE?”

  1. Wedding venues tend to take up a significant portion of your expenditure. Consider having it at the void deck? Make void decks great again!

  2. Revisit the concept of invitation. The larger the event, the more expensive it becomes especially for catering and door gifts (though not exponentially). Who will you invite? Have a discussion with your parents on this.

  3. Prioritise value over price. Cheap things may ultimately become expensive when you consider the headaches, heartaches and stress that you may go through leading towards the wedding day and further. Look for trustworthy vendors who’ve stood the test of time and challenges (especially COVID). Those who survived during COVID may indicate that they have the resilience from the business standpoint and hence, present lower risk for you.

  4. Book early. The earlier you do your booking, the lesser the chances are at incurring price increases. Pricing is both demand and supply. Vendors usually have targets and once they reach certain targets, they raise their prices so that they can maintain their standards (no one would want to take up more than they can handle). So the earlier you book, the higher your chances are at securing your spot before the vendors resort to raising their prices.

  5. Package up now rather than ala-carte later. Some people prefer to spend less on their package now thinking that whatever add-ons that they wish to have later on can be added on later. These add-ons will be subject to the price increase later on. It will be much better to capture what you need as a package earlier on, locking in the prices on the date of you signing. Add-ons that form part of the package tend to also be discounted rather than taking them ala-carte!

The list of what you can do is not exhaustive. These are the simple 5 ways on how you can soften the blow for the increase in GST especially in preparing for a high ticket event like your wedding. Run through your planning and costing (we have an excellent resource here that can help you with that!) and look into what is important to you and your family for this momentous event.

To help you gain an overview of your costs, we have also specially prepared a simple Wedding Budget Planner that you can use to help plan your budget properly. You can download it below!

Download our spreadsheet and start planning your budget for your wedding!

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