Singapore Budget 2018: Singapore unveils targeted budget for sustainable growth
SINGAPORE'S Finance Minister Heng Swee Keat unveiled on Monday an expansionary budget guided by the government's promise of 'vibrant and innovative' economic growth without leaving anyone behind.
The various ministries' total expenditures are expected to be S$80.0 billion, or 8.3 per cent, higher than in FY2017, with a slight overall budget deficit of S$0.6 billion, or 0.1 per cent of gross domestic product (GDP), expected.
"Budget 2018 is about laying the foundation for our nation's development in the next decade,'' Mr Heng told parliament.
This budget, experts say, takes a significant step forward by setting a targeted strategy for the next decade, especially on the need for businesses to move away from cost competition and differentiate through innovation.
While Singapore's economy grew at a better-than-projected 3.6 per cent last year, up from 2.4 per cent in 2016, Mr Heng noted that rising wage costs remain a key concern for businesses. To address this, the government will extend the Wage Credit Scheme (WCS), which co-funds wage increases for Singaporean employees, up to a gross monthly wage of S$4,000, for three more years - a move that will cost the government S$1.8 billion over the period.
It will also raise the corporate income tax (CIT) rebate to 40 per cent of tax payable, capped at S$15,000, for the year of assessment (YA) 2018. The CIT rebate will be extended to YA2019, at a rate of 20 per cent of tax payable, capped at $10,000.
The marine shipyard and process sectors, which still face weakness, will enjoy some reprieve from the deferment of the earlier-announced hikes in foreign worker levy rates for another year.
Firms can look forward to more support for adopting new technologies to sharpen their competitive edge. There is also help to venture overseas with the enhancement of the Double Tax Deduction for Internationalisation (DTDi).
With digital technologies gaining importance, an additional S$145 million will be put aside for the TechSkills Accelerator (TeSA) programme over the next three years. TeSA will be expanded into new sectors like manufacturing and professional services to equip more people with emerging digital skills.
In a bid to cut Singapore's carbon footprint, a tax of S$5 per tonne of greenhouse gas emissions in the first instance, from 2019 to 2023, will be slapped on all facilities producing 25,000 tonnes or more of greenhouse gas emissions in a year. This will be reviewed by 2023, with the intention to increase to a rate of between S$10 and S$15 per tonne of emissions by 2030. The government expects to collect carbon tax revenue of nearly S$1 billion in the first five years. For households, the impact of the carbon tax will be small, at about 1 per cent of total electricity and gas expenses on average.
Beyond businesses, Budget 2018 is also about fostering a caring and cohesive society, especially in face of an ageing population. Family members are encouraged to live with or near each other, with the enhancement of the Proximity Housing Grant (PHG) and a simplified definition of "near" to mean within 4 kilometres instead of "living in the same town or within 2km".
Some 900,000 households will benefit from the extension of service and conservancy charges rebate, which will cost the government S$126 million.
For the first and second foreign domestic worker (FDW) employed without levy concession, the monthly levy will be raised from S$265 to S$300 and S$450 respectively from April 1, 2019.
Singapore will put aside some S$10.2 billion for healthcare expenditure, S$20 billion for infrastructure and S$12.8 billion for education this year.
To support recurrent needs, the government plans to raise the goods and services tax (GST) by two percentage points, from 7 per cent to 9 per cent, sometime in the period from 2021 to 2025.
It will also raise the top marginal Buyer's Stamp Duty (BSD) rate for residential properties from 3 per cent to 4 per cent. The new top marginal rate of 4 per cent will apply to the portion of residential property value which is in excess of S$1 million. This change will apply to all residential properties acquired from Tuesday, Feb 20, 2018. GST on imported services will be imposed with effect from Jan 1, 2020.
For FY2017, the government expects an overall budget surplus of S$9.6 billion, or 2.1 per cent, of GDP. This is higher than the S$1.9 billion, or 0.4 per cent of GDP forecasted a year ago.
The increase of S$7.7 billion is mainly due to exceptional statutory board contributions of S$4.6 billion, primarily from the Monetary Authority of Singapore, and to increased stamp duty collections of S$2.0 billion following the recent property market pick-up, Mr Heng said.
To share some of this year's surplus with Singaporeans, the government will declare a one-off SG Bonus. All Singaporeans aged 21 and above in 2018 will enjoy a cash "hongbao" of S$300, S$200 or S$100, depending on their income.
Source: Tan, Angela. “Singapore Budget 2018: Singapore Unveils Targeted Budget for Sustainable Growth.” The Business Times, 19 Feb. 2018, www.businesstimes.com.sg/government-economy/singapore-budget-2018/singapore-budget-2018-singapore-unveils-targeted-budget-for.