By Freda Peh
The news that imported digital services will be subject to a nine per cent goods and services tax (GST) from 2020 has drawn mixed reactions from students.
The Budget statement last month said that the GST ruling would apply to services provided by foreign companies with global revenues exceeding S$1 million and local revenues from digital services exceeding S$100,000.
This includes popular digital services such as Spotify and Netflix. The latter company reported a revenue of US$3.3 billion in the last quarter of 2017.
While these companies have not disclosed information on their local subscriber base, Assistant Professor Woo Jun Jie from the School of Social Sciences estimates more than half these digital consumers to be millennials (aged between 18 to 35), with the tax burden heavier on full-time students with no income.
“If you count millennials, it’s easily half to three-quarters of existing consumers affected.”
Asst Prof Woo said taxing Singaporeans on these services would mean higher tax revenues for the government, because of the country’s thriving digital economy.
Most students expressed concern about the impending digital tax affecting their expenditure, as they rely on their parents’ allowance or part-time jobs to earn pocket money.
“I think all students just want to focus on school without worrying too much about expenses,” said Jolene Chea, a second-year student from the School of Humanities (SoH).
The 22-year-old, who is on the university’s financial assistance scheme, is concerned about how the implementation of a digital tax will strain the already limited income of students from less-privileged backgrounds.
Other students say it might prompt them to reduce their purchases on online retail and streaming services.
Amelia Chua, a third-year student from the SoH, said that instead of paying for Spotify Premium, she would consider using either the free version, or AMPed from SingTel.
Digital education services, such as e-learning platforms, were also a concern among students.
Turning Technologies, the American company behind NTU’s Blackboard e-learning platform, raked in a gross estimated revenue of US$98.4 million last year, making the company potentially eligible for the tax.
Speaking to the Nanyang Chronicle, digital experts have raised concerns about an increase in piracy, as students try to avoid the digital tax by using free platforms instead.
In a 2017 study by Asia-Pacific research firm Sycamore, 39 per cent of Singaporeans admitted to illegally streaming or downloading movies, TV shows or live sports broadcasts.
“In a way, consumption habits will change, and these platforms will need to offer more to justify (higher) costs to students and consumers,” said Asst Prof Woo.
However, most students believe the “Netflix Tax” would not encourage greater piracy for students currently using paid services.
“Those who are already engaging in (piracy) will be more inclined to continue and those who aren’t, are already willing to pay,” said Chia Yun Ting, 22, a final-year student from the Nanyang Business School (NBS).
Nicholas Phang, a second-year student on a double-degree programme at the School of Computer Science and Engineering and Nanyang Business School, also believes that not all types of services will see an increase in piracy.
“Entertainment services like the latest movies are more likely to be pirated than productivity services like Evernote and Dropbox which have greater protection laws”, said Phang.
Overall, Assistant Professor Kelvin Law from NBS does not believe that the consumption habits of Singaporeans will change much because of the digital tax.
“I think nine per cent will be a small impact. In the long run, the main question is how high it will get. A nine per cent GST is a single-digit percentage, and it is still low compared to some European countries, which go up to 27 per cent.”
With online transactions growing more popular, NTU student Nicholas Phang believes students have to make conscious choices in what services to use.
He said: “If we choose to use the paid versions of digital services, it’s like paying for any other goods or services in Singapore. You can always choose to watch Mediacorp if you don’t want to pay for Netflix.”