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Singapore Budget 2020: 8 Important Announcements That Will Affect You Financially

Good news all round: No GST increase (yet), $500 SkillsFuture credits, CPF contribution matching for eligible seniors, and more.

At 3pm today (18 February 2020), Finance Minister Heng Swee Keat delivered his Budget 2020 Statement, which outlined the government’s key spending priorities and measures for the year.

Minister Heng spoke about the long-term, structural challenges facing Singapore, such as “tectonic shifts” in the global economy and growing geo-political uncertainties. Amid this, Singapore’s economy saw its weakest growth in 2019 since the 2008 Global Financial Crisis of just 0.7%. The ongoing COVID-19 situation only serves to add to near-term difficulties.

To address these challenges, the budget position for FY2020 will be expansionary, with measures aimed at providing a substantial boost to the economy amid the global COVID-19 outbreak and resulting economic uncertainty.

Read Also: Behind The Budget Statement: Here’s How Singapore’s National Budget Is Planned Each Year

Broadly, these consist of two broad packages, costing $5.6 billion in total: 1) Stabilisation and Support Package for workers and enterprises to cushion the impact on business and jobs; and 2) Care and Support Package for households to manage rising expenditures.

Minister Heng said that there will be an expected overall deficit of $10.9 billion, or 2.1% of GDP, but emphasised that because of fiscal prudence since the beginning of this term of government, there are sufficient accumulated fiscal surplus to fund the overall deficit in FY2020, and thus, no draw on past reserves.

In this article, we will highlight 8 measures that were announced in Budget 2020 that will serve to support Singaporeans and companies in Singapore today, while putting them in the best position to seize opportunities of tomorrow.

Read Also: Singapore Budget 2019: Here Are 4 Of The Most Important Announcements That Affect All Of Us

#1 Stabilisation and Support Package

The COVID-19 situation has led to a slowdown across business sectors, particularly for the tourism, air transport, retail, food services, and point-to-point land transport sectors.

The $4 billion Stabilisation and Support Package will help workers retain their jobs, while allowing workers and companies to take advantage of the relative lull to upgrade their capabilities and be ready to take advantage of the uptick when the tide turns.

The new Jobs Support Scheme and enhancements to the existing Wage Credit Scheme will help workers keep their jobs, by subsidising part of their wage cost for companies.

Enhancements to Workforce Singapore’s Adapt and Grow initiative and Jobs Support Scheme will support companies retain, upskill and redeploy more than 330,000 workers in the affected sectors.

Read Also: The Singaporean Journey: Through The Lens Of The Singapore Budget

#2 Care and Support Package for Households

The Care and Support Package was rolled out to support all Singapore households with their daily expenses during this period of uncertainty and will cost approximately $1.6 billion.

To help ease the financial burden during this difficult period, there will be one-time cash payout of $300, $200 or $100 to all Singaporeans aged 21 and above in 2020. There will also be an additional $100 cash payout this year for every adult Singaporean with at least one Singaporean child aged 20 years and below.

The U-Save rebates that Singaporean households receive will be doubled in 2020 through a one-off GST Voucher – U-Save Special Payment, which will help free up cash for other household expenses. For larger households with five or more members, there will be additional GST Voucher – U-Save rebates to help them with their utility bills.

Minister Heng also announced that the Service and Conservancy Charges Rebate of between 1.5 to 3.5 months will be extended by another year.

Lower-income Singaporeans will get additional aid, on top of the above measures. These include a Workfare Special Payment. Singaporeans who already qualify for Workfare will receive 20% more in cash for work done in 2019, with a minimum payment of $100. Needy Singaporeans will also receive $100 in grocery vouchers per year in 2020 and 2021, usable at major supermarkets.

Finally, there will be a one-time $100 top-up to the PAssion Card of all Singaporeans aged 50 years and above, including Pioneer Generation and Merdeka Generation seniors.

#3 GST Will NOT Be Increased In 2021

After careful consideration of the economic conditions, Minister Heng announced that the planned GST increase will not take place in 2021.

The necessity of GST increase to address long-term, structural increase in spending means that the increase cannot be put off indefinitely and will need to happen between 2022 and 2025. However, Minister Heng has assured Singaporeans that sufficient lead time will be given when the time comes.

There will also be comprehensive measures to help offset the impact when the increase is implemented, especially for lower and middle income Singaporeans. These include enhancements to the permanent GST Voucher scheme and an Assurance Package for when the GST rate is raised.

These steps ensure that Singapore’s taxes and transfers system remains progressive.

Read Also: GST Increase: Here’s How Much The Government Will Collect – And How Much More Will You Be Paying

#4 $500 SkillsFuture Credit For Singaporeans Above The Age Of 25

Aside from helping cushion short-term difficulties arising from the COVID-19 outbreak, Budget 2020 is meant as a strategic financial plan to help Singapore and Singaporeans better meet challenges of the future.

To actualise Singapore’s vision of becoming a global hub for businesses, Minister Heng announced that the government will be allocating $8.3 billion over the next three years to 1) build stronger partnerships (both within Singapore and with the world); 2) deepen enterprise capabilities; and 3) develop our people.

Particularly relevant to Singaporeans is the Next Bound of SkillsFuture, in which every Singaporean aged 25 years and above will receive a one-off SkillsFuture Credit top-up of $500, which expires in 5 years. This will support Singaporeans in their lifelong learning journey.

Singaporeans who are in their 40s and 50s can look forward to a new SkillsFuture Mid-Career Support Package, on top of the SkillsFuture Credit to support them in remaining employable amid the fast changing job landscape.

Finally, there will be a new SkillsFuture Enterprise Credit introduced, together an expanded Productivity Solutions Grant to add support for pre-approved job redesign consultancy services.

#5 Enhanced Financial Assistance And Bursaries For Students

The annual bursary quantum for students below tertiary level will be raised from $900 to $1,000, while the MOE Financial Assistance Scheme will be bolstered by an additional $9 million per year.

All school students can look forward to increased transport subsidies, and secondary school students will enjoy greater school meal subsidies.

Full-time ITE students can receive subsidies of up to 100% of their course fees, with enhancements to cash bursaries.

#6 Dollar-For-Dollar Matching On CPF Contributions For Seniors

From 2021 to 2025, a Matched Retirement Savings Scheme will be introduced to help the segment of Singapore’s senior population who have difficulties building up retirement savings in their CPF.

For those who qualify for this scheme and yet to meet the CPF Basic Retirement Sum, the government will match dollar-for-dollar all CPF cash top-ups regardless of the source of the contribution, capped at $600 per year.

Complementing these efforts to provide lower-income seniors with greater assistance for their retirement needs, Minister Heng announced that the Silver Support Scheme will be enhanced, and the government will be topping up $750 million to the ElderCare Fund, $500 million to the ComCare Fund, and $200 million to MediFund.

Read Also: Retirement Sum Topping-Up Scheme (RSTU) VS CPF Voluntary Contributions: What’s The Difference?

#7 Enabling Employment Credit To Encourage Hiring Persons With Disabilities

A new Enabling Employment Credit (EEC) will be launched to provide stronger support for employers of persons with disabilities. It will be available for five years, from 2021 to 2025. The exact criteria and quantum will be reviewed and adjusted after two years to ensure it continues to fulfil the goals of helping persons with disabilities enter and stay in the workforce.

This is estimated to cost about $31 million per year.

#8 Monetary Incentives To Push Adoption Of Electric Vehicles

In support of Singapore’s vision to phase out individual combustion engine (ICE) vehicles and have all vehicles run on clean energy by 2040, the government will be enhancing incentives to encourage the adoption of cleaner and more environmentally friendly vehicles.

Investments will also be made to expand the public charging infrastructure for EVs, while the government will also take the lead to progressively procure and use cleaner vehicles.

Advancing Together As One Singapore

Despite the variety of challenges faced by Singapore as a country and Singaporeans individually, Minister Heng rounded up his Budget 2020 Statement with optimism, expressing his confidence that Singapore has the necessary financial, human and social capital to achieve all the goals that are embodied by Budget 2020.

By coming together as One Singapore, we can grow the economy and transform our enterprises, creating opportunities for Singaporeans, care for and nurture Singaporeans at every stage of their lives, to build a caring and inclusive society, as well as build and secure Singapore so we are well-prepared to meet future challenges while ensuring fiscal sustainability.

Read Also: The National Budget: Spending Today vs Investing For The Future? Which Is More Important? aims to provide interesting, bite-sized and relevant financial articles.

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