During his budget speech, Deputy Prime Minister (DPM) and Finance Minister Lawrence Wong mentioned that having drawn $40 billion in Past Reserves since 2020, 2023 will be different – with spending expected to lead to a budget deficit of $0.4 billion.
The theme for Singapore Budget 2023 is “Moving Forward in a New Era”. We are now in the post-COVID-19 era, and working in a high-inflation landscape. As with previous budgets, there are announcements that will impact certain sectors more than others.
We look at 4 sectors that will be impacted by the announcements in Singapore Budget 2023.
#1 Baby Sector
It’s common knowledge that Singapore is an ageing country, and that the birth rates here are very low. The fertility rate in Singapore is only 1.12. In a bid to spur couples to having more children, a slew of baby-related measures were announced.
First, the Baby Bonus Cash Gift will be raised for babies born on 14 February onwards. Eligible 1st and 2nd child will receive $11,000, while the 3rd and subsequent child will get $13,000. The First Step Grant will also be raised to $5,000. At the same time, the government co-matching will be increased for 1st (to $4,000) and 2nd child (to $7,000).
In addition, the Working Mother’s Child Relief will be changed from a percentage of their earned income to a fixed dollar amount. This change will benefit working mothers who earn less than $53,000 a year.
Working fathers will also potentially enjoy 2 more weeks of Government-Paid Paternity Leave for their children born in 2024. This extra 2 weeks of Paternity Leaves can be given on a voluntary basis for now. Both working mothers and fathers can also tap on an additional 6 days of Unpaid Infant Care Leave each year.
To encourage couples to start families, First-Timer families with children and young married couples below 40 will be given an additional ballot for their BTO flat applications. Those buying resale flats can also look forward to up to $30,000 in extra CPF Housing Grants.
Hopefully, this will lead to more babies in Singapore – potentially benefitting healthcare, infant care, baby products and other types of businesses in the “baby sector”.
#2 Car Dealers
A common theme in recent budgets is that those with greater means should contribute more. Sectors that will see increased taxes is the luxury car market and higher-end property market (more on this later).
Apart from the COE (Certificate of Entitlement), cars in Singapore are also taxed, with an Additional Registration Fee (ARF), on their Open Market Value (OMV). This ARF will be raised for cars that have an OMV of $40,000 and above.
With this increase, even mid-range cars with an OMV above $40,000 will be impacted. Needless to say, luxury cars will cost much more with the ARF raised to 320% at the highest end.
#3 Real Estate
Land is scarce in Singapore, and hence, our love for properties. Singapore is also one of the few places in the world where higher interest rates have not yet impacted property prices.
In the Singapore Budget 2023, DPM Lawrence Wong announced an increase in the Buyer’s Stamp Duty (BSD). Unlike the Additional Buyer’s Stamp Duty, this move will impact those buying their first properties.
Nevertheless, the increase will also be targeted at higher-end residential properties (valued above $1.5 million) and non-residential properties (valued above $1 million).
This may impact property developers looking to sell luxury properties, as well as cool any en-bloc plans.
At the same time, we also mentioned that CPF Housing Grants for resale flats will be raised by as much as $30,000. In total, this will raise the total CPF Housing Grant that eligible First-Timer families can get to up to $190,000.
Potentially, this will keep the HDB resale market vibrant – which may benefit real estate agencies.
#4 MNCs In Singapore
From 2025, corporate income tax for multinationals in Singapore will be affected by BEPS 2.0, a global agreement to increase the floor tax rate to 15%. This will impact large companies who may look to come to invest in Singapore for its attractive corporate tax structure. Multinationals already in Singapore will also see their effective tax rate raised to this minimum.
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