3:33pm: Minister Heng Swee Keat starts the budget off by recapping some of the challenges that Singapore will face in the global economy that we live in. These include 1) a shift in global economic weight towards Asia, 2) emergence of new technologies and 3) our ageing population.
Building A Vibrant And Innovative Economy
3:40pm: Firms remain concerned about business cost. One key concern is wage growth. Ironically, the problem here is that wage growth, while a concern for business owners, is good for Singaporeans.
> Wage Credit Scheme (WCS) to be extended for three more years. WCS helps co-fund wage increases of Singaporeans up to a salary $4,000. Co-funding will be 20% for 2018, 15% for 2019 and 10% for 2020.
> Corporate Income Tax rebate will be raised to 40%. Capped at $15,000 for YA2018.
Longer Term Transformation For The Economy
3:43pm: Strengthen the three enablers to build the Singapore economy: Innovation, Capability and Partnership.
3:46pm: Innovation – Support firms to become more innovative. Temasek and NRF to work together to help companies grow and develop their intellectual property. At least $100 million will be invested into this program.
3:51pm: Deepening Capabilities – Spring and IE Singapore to merge into Enterprise Singapore.
> “Every profitable company should pay taxes” – Minister Heng. Start-Ups and older firms will see their taxes go up slightly as tax exemptions are slightly reduced.
Clean & Green City
4:14pm: Singapore produces one of the least carbon emission compared to most countries. To encourage companies to further reduce carbon emissions, Carbon tax will be introduced in 2019. This will be set at $5 per tonne of emission, and is expected to raise about $1 billion over a period of 5 years. For petrol and diesel, no additional taxes (for now). Carbon tax is unlikely to affect household by much. However, addition U-Save vouchers will be given to selected families to help them cope with this small increase in cost.
Increasing Support For Citizens
4:40pm: Support Singaporeans and their families by supporting education. Annual Edusave top-up from $200 to $230 for primary school students, and from $240 to $290 for secondary school students with effect from 2019. Additional support for students from lower income families by raising bursary from $750 to $900.
> Give our youth a good financial literacy head-start. Financial education curriculum to be introduced at Polytechnic and ITE.
> Premium subsidies for lower and middle income families for ElderShield Review
> Support families who live with and near each. Proximity Housing Grant (PHG) to increase from $20,000 to $30,000 for those buying a resale flat to live with their parents/ adult children. PHG criterion will also be expanded from within a 2km radius, to within a 4km radius.
> Foreign Domestic Work levies will be revised upwards.
> $190 million a year set aside to encourage volunteerism
Ensure Fiscal Sustainability In The Long-Term
5:00pm: Between 2021 to 2030, Singapore will not have enough based on current revenue. For example, healthcare spending have more than doubled. Spending is expected to continue increasing as our population becomes older. By 2030, we will have more than 900,000 elderly in Singapore. Healthcare expenditure is expected to be higher than education by the next decade.
> Another big area of spending is infrastructure. Over the next decade, Singapore will continue to spend more on infrastructure.
> Invest more in security to keep Singapore safe. These include both online and offline threats.
> Continue to sustain our investment in education. Singapore is spending more per child. Greater investment as well to be made in pre-school education. Singapore will also continue to invest in lifelong learning.
> A strong economy will provide Singapore with more resources to fund our future needs.
> To help lower financing cost, Government will consider guaranteeing long-term bonds that it issues. This allows it to leverage on the strength of its reserve, without actually needing to touch it.
5:14pm: It’s official. GST will increase from 7% to 9%. This will happen between 2021 to 2025.
> GST to be introduced on imported digital services with effect from 2020. For example, local consumers do not currently pay tax when they purchase and download apps and music online. This will ensure fairness for both offline and online purchases of digital services and consultancy.
> Buyer Stamp Duty (BSD) to increase for private residential properties from 3% to 4%. This applies to all properties with a value of more than $1 million.
> Tobacco tax to increase by 10% with immediate effect. This will apply to all tobacco products.
> Good News: There will be a one-off SG Bonus (Hong Bao) of $300, $200 or $100. This will be for Singaporeans age 21 and above, and based on income. It will cost the government about $700 million.
Minister Heng Swee Keat ended his presentation at 5:30pm.
You can watch the full 2-hour long Budget Presentation here.
Before the budget is announced, you can read up on some of the pre-budget related articles that we have written.
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