Reflection Journal - 6_Reflection Journal(BRENDA THEN BOON HIN, 23012115)

 No further action required. This task has been closed.
Instruction and Other Information
Q: Singapore increased its GST rate to 8% with effect from 1st Jan 2023. Using the concepts learnt today, compare the impact of this tax increase on consumers’ burden fo
tea.
When GST tax increases to 8%, consumers and producers will feel burdened
by it as the indirect tax will most likely cause the general price of goods and
services to increase, which causes or creates financial burdens to both
consumers and producers.
When there is an implementation of the 8% GST tax on bubble tea, the
demand for it should be elastic. This is because bubble tea is not an essential
good to consumers as there is a high chance that there is a substitute for it
which allowed me to determine that the demand curve will be elastic.
When the tax implied is GST, it gives me the idea that the tax will be an Ad
valorem tax as the 8% GST imposed on the bubble tea will be proportional.
Refer to the graph drawn:
Since the GST tax is an Ad valorem tax, it results in the supply curve to have
a pivot shift to the left from s1 to s2. With the idea that the demand curve for
bubble tea is elastic, from the graph drawn. the shaded area for the
consumer’s tax burden (p1 to p2) is smaller than the area shaded for the
producer’s tax burden(p1 to p3). Thus this indicates the tax burden on
producers (shaded in blue) will be higher than the consumer’s tax burden
(shaded in purple).
As compared to bubble tea, insulin is an essential good for consumers as
there is highly likely no other way consumers are able to find a substitute for
it. This indicates that the demand curve for insulin will be inelastic. Hence,
when there is an imposition of an 8% GST tax, there is most likely no change
in the demand for insulin among consumers.
Refer to graph drawn:
With the same concept that GST tax is an Ad valorem tax, it will result in the
supply curve to still have a pivot shift from s1 to s2. The graph thus
highlights that the total tax burdens area shaded in pink for consumers’ tax
burdens is bigger than the area shaded in green which represents the
Plagiarism Score: 16.00% 
producer’s tax burden. It indicates that when the demand is inelastic, the
consumer’s tax burden is thus higher than the producer’s tax burden.
Hence, the tax burden for bubble tea falls more on producers whereas the tax
burden for insulin falls more on consumers.
Despite knowing the idea that having an implementation of taxes like GST of
8% is one of the ways for the government to generate more revenue for the
economy, some tax implementation on goods that cannot be replaced like
insulin will cause burden to consumers. By allowing the government to set a
price ceiling for goods like insulin, it thus prevents it to be sold at a high and
unfair price which will allow consumers to be able to afford it.
 Add Specific Comment
Lecturer Rating
Report Vulnerability 
 Expand All
Pow
Last Update