Minister for Finance, Lawrence Wong, will deliver the Singapore Budget 2022 Statement in Parliament on Friday, 18 February 2022, 3.30pm. This will be his first Budget Statement as Finance Minister.
Stay tuned to our live coverage, for the latest announcements and updates of Singapore Budget 2022, as it happens. We will also provide real-time commentary on the potential implications that the announcements may have for Singapore and Singaporeans.
This page will be updated periodically as the Budget 2022 statement is delivered.
3.30pm: Parliament is still in session, and Budget Statement 2022 has yet not begun.
3.36pm: Minister for Finance, Lawrence Wong, is in Parliament delivering Budget Statement 2022.
It’s been two years that Singapore has been managing the COVID-19 pandemic. Singaporeans have rallied and supported one another during this challenging phase. As the global pandemic enters its third year, we will have to adapt to living with COVID-19 going forward.
The economy has rebounded strongly. After committing close to $100 billion to combat COVID-19, Singapore’s resident unemployment rate has declined and the median income has risen. Singapore will continue to be boosted by the pickup in the global economy and recovery of key trading partners in the region.
However, geopolitical and COVID-19 uncertainties continue to loom. The threat of inflation is also real.
Nevertheless, our economy should grow 3% to 5% in 2022, to secure the livelihoods of all Singaporeans.
Jobs and Business Support Package
3:41pm: SMEs in the eligible (hard-hit) sectors will receive $1,000 per local employee they hire, up to $10,000 per firm.
Sole-proprietor, partnerships and stallholders in such sectors that do not hire local employees will be given a $1,000 one-off grant.
Workers who continue to face income loss will also continue to be able to tap on government grant.
Jobs Growth Incentive (JGI) will also be extended to September 2022.
The aviation sector will also receive targeted support to preserve Singapore as an aviation hub.
These support measures will provide temporary relief for businesses and workers.
3:43 pm: MAS has taken pre-empted steps to help dampen the effect of inflation.
To support companies with cash flow needs, the Temporary Bridging Loan (TBL) programme will be extended for another 6 months to 30 September 2022.
Household Support Package
3:46pm: Eligible HDB households will receive a Household Support Package worth $560 million.
This will go towards doubling GSTV-U-Save rebates, up to $285 more, for eligible households for April to December 2022.
Singaporean children aged 20 and below will also receive $200 top-ups to their education-related accounts.
Finally, $100 worth of CDC vouchers will be given to Singaporean households, to be used at participating heartland merchants and hawkers in 2022.
Creating Good Jobs For Singaporeans
3:47pm: We must remain open and welcoming to talent from around the world. We have a world-class infrastructure and a digitally-advanced workforce. Our economic prospects are good, but we have to adapt quickly to a new environment.
Rivalry between U.S. and China will impact the world for the rest of the decade, and more.
Technology will continue to offer rich opportunities to businesses. However, this also enables MNCs to relook their supply chains, and re-shore certain operations. We must look for opportunities beyond our shore and in new areas.
The fast pace of change will give rise to greater uncertainties. We need to step up efforts to upskill workers.
While inequality has steadily improved over the past decade, we need to do more. Growth may become harder to keep inclusive, as those with better exposure to opportunities will gain the most.
By 2030, 1 in 4 Singaporeans will be 65 and above. There will be rising demand for healthcare, and strain the system. We must plan ahead to look after more seniors.
Climate change is another area we have to tackle. Island-nations like Singapore will be most threatened by rising sea levels. The problem is existential, and hence we must take steps to de-carbonise.
These are some of the defining challenges of our time.
Public Spending & Taxes
3:56pm: The government spending today is $88 billion, or 16% of GDP. This is lower than most developed economy. We are supported by NIRC, from our reserves accumulated over the years. NIRCs contributed about 3.15% of public funding.
This has helped us keep taxes low. Half our workers pay little to no income tax.
For the quality of public services we enjoy, the amount of taxes our workers pay is considerably lower than those in other developed economies.
4:00pm: In the coming decades, public spending will only rise. We cannot continue using reserves to fund the rising expenses.
Tax adjustments will need to be adjusted. Where everyone contributes, but those with greater means, contribute more. This will create a fairer, more sustainable, and giving society.
Accelerate Investments In New Capabilities
4:06pm: We will invest in future technology, such as 6G capabilities. $200 million will be set aside for these digital capabilities.
The government has been spending about 1% of GDP, or $25 billion, will be set aside to continue funding research. This also acts as a catalyst for private sector research.
Traditionally, better-funded MNCs were the main drivers of R&D projects. Therefore, more support will also be provided for local businesses to embark on R&D projects to spur new innovations.
4:10pm: The priority is also to raise productivity. $600 million will be set aside to the Productivity Solution Grant (PSG), to support more than 1,000 projects.
A new initiative called Singapore Global Enterprises, will provide bespoke services for firms expanding overseas.
Under the Enterprise Financing Scheme (EFS), the Merger & Acquisition (M&A) Loan will be expanded from 1 April 2022 to 31 March 2026 to include domestic M&A activities. Trade Loans, under the EFS will also be extended for a further 6 months to 30 September 2022. Enhanced Project Loans, under the EFS, will also be extended to 31 March 2023 to support local construction projects.
4:13pm: Investing in people remains important, and SkillsFuture is an important avenue to do this.
The SkillsFuture Enterprise Credits will also help businesses to upskill their employees. To better support smaller and micro enterprises, there will be a waiver of Skills Development Levy contribution requirements. Up to $10,000 credit can be used to offset up to 90% of expenses for transformation initiatives.
Employers will also need to re-design jobs to achieve greater productivity and develop valuable skills in the workforce. This will lead to better wages and job prospects for workers in Singapore.
Mid-career workers in their 40s and 50s are more vulnerable in the fast-evolving jobs environment. Various models to help them, such as the Place-and-Train or Attach-and-Train models, or the Train-and-Place route.
4:20pm: To ensure that Employment Pass holders (EP holders) are of the right calibre, we adjust the minimum wage is adjusted. From Sep 2022, the minimum salary for EPs will be raised to $5,000 and for the finance sector, it will be raised to $5,500.
Likewise, for S Pass holders qualifying salary will be increased in phases. In the first step, S Pass salaries will be raised to $2,500 from Sep 2022, and $3,000 for the finance sector. There will be further increases in the coming years, and the specific values will be revealed when they are announced.
To better manage the flow of S Pass holders. Levies will be raised to $600 by 2025, from $300.
From 1 Jan 2024, dependency ratios will also be reduced.
Singapore’s Green Transition
4:26pm: Singapore is fully committed to doing its part to transition to a net-zero world. Green-tech has been improving leaps and bounds.
Today, carbon Tax is charged at $5 per tonne. This will be raised to $25 per tonne in 2024 and 2025, and $45 per tonne in 2026 and 2027. By 2030 Carbon Tax will be raised to $80 per tonne.
There will be no additional carbon tax will be imposed on petrol and diesel. They are moderated via excise taxes, which will also be reviewed periodically.
4:31pm: A transition framework will help emissions-intensive and trade-exposed companies to mitigate impact on business cost. From 2024, businesses can also use high-quality carbon credits to reduce up to 5% of their taxable carbon emissions.
For households, this will mean higher utility bills. This will be mitigated through transitional U-Save rebates.
The Singapore Green Plan 2030 was launched in 2021 to spearhead first-mover advantage in the green economy. Moving quickly, Singapore can become the go-to location in Asia for green-tech and green finance. Singapore now accounts for more than half of green loans and bonds.
By 2030, the public sector will issue up to $35 billion of green bonds, with the first issuance to be done later in 2022.
Singapore will maintain a zero growth rate for private vehicles. There is also a plan to phase out Internal Combustion Engine by 2040. More infrastructure upgrades, such as EV charging points, will also be built closer to where we all live.
Supporting Social Safety Nets For Singaporeans
4:40pm: The government has been doing more to support the social safety nets for Singaporeans.
We will uplift lower-wage workers. Over the next 2 years, we will extend the Progressive Wage Model (PWM) to more sectors and occupations. Companies hiring foreigners must pay their local workers the Local Qualifying Salary (LQS), that is currently $1,400. The government will also require all local suppliers to have the Progressive Wage Mark by March 2022.
The Progressive Wage Credit (PWC) Scheme will provide transitional support. The government will co-fund the wage increases from 2022 to 2026. This will cost the government $2 billion over the next 5 years.
The Workfare Income Supplement will also be boosted from 1 Jan 2023, from $2,300 to $2,500 per month. More workers will be supported. Workfare will also be extended to younger workers from age 30 to 34.
There will also be higher annual workfare payouts from 2023.
This combination of Progressive Wages and Workfare, the income of lower-wage workers will grow faster than the median wage.
4:48pm: Workers aged 55 to 70 will see a further 1.5% to 2% increase in CPF contribution rates in 2023. Both Employee and Employer contribution rates will increase as announced. A transitionary offset page will also be extended for this second phase of CPF contribution increases.
This is beyond the CPF increase that has already taken place in 2022.
The BRS will also be increased 3.5% each year for the next 5 years – from 2023 to 2027 – for those turning 55.
4:50pm: The Fresh Start Housing Scheme will be enhanced for lower-income families to own their own homes. KidStart and UPLIFT are other programmes that will also be enhanced to benefit more children from low-income households.
ComLink will be enhanced to provide targeted support to ensure social mobility.
Healthcare Remains A Critical Priority
4:55pm: As one of the fastest ageing nations in the world, healthcare costs will increase significantly. By 2030, we will spend about $27 billion on healthcare. The current trajectory of increase is not sustainable.
A “Healthier SG” strategy will be thought through carefully.
COVID-19 has also brought forth conversations on mental health.
An Enabling Masterplan will also be announced for Persons with Disability (PwD) to continue thriving in Singapore.
We Need More Tax Revenue
5:02pm: We will need more tax revenues to fund Singapore’s expenses, making major enhancements to tax structure.
However, Singapore will lose corporate tax revenues from the companies operating here, as the local consumption market is small. There might be some additional yield of tax under a second pillar to increase a minimum corporate tax rate of 15%.
We need to ensure that Singapore remains a competitive place to do business.
There is also room for higher personal income tax to be levied on those who are more well off.
Top marginal personal income tax will be increased from year of assessment (YA) 2024. Those earning $500,000 to $1 million will see personal income tax increase to 23%, and those earning in excess of $1 million will be raised to 24%.
5:08pm: All non-owner occupied properties will see property tax rates will be increased from 10% to 20%, to 12% to 36%.
For owner-occupied properties, property tax will increase from 4% to 16%, to 6% to 32%.
The increases will be implemented from 2023 in a 2-step process.
5:11pm: A new ARF tier for luxury cars at 220%, on portion of Open Market Value above $80,000.
5:12pm: Finally, the GST increase will be delayed to 1 Jan 2023. The first increase – from 7% to 8% – will take place on 1 Jan 2023, and the second increase – from 8% to 9% – will take place on 1 Jan 2024.
A committee will be set up to prevent business from profiteering.
An additional top-up of $640 million will be used for an Enhanced Assurance Package – bringing the Assurance Package to $6.6 billion. This is to offset around 5 years of GST, with lower-income households will see GST increase offset by around 10 years.
The GST Voucher scheme will also be enhanced permanently in 3 ways.
1) $700 to $1,600 cash payout to every adult Singaporean aged 21 and above over the next 5 years; GSTV-U-Save rebates of $330 to $570 for eligible households over the next 4 years; GST Voucher – Senior Bonus of $600 to $900 for eligible seniors of over next 3 years.
2) $400 worth CDC Vouchers over 2023 and 2024.
3) MediSave top-ups of $450 for Singaporean children aged 20 and below and seniors aged 55 and above over next 3 years.
This will help households fully offset the total increase in GST that retiree households have to pay. Lower-income households, without seniors in their family, will see about half the increase in GST offset on a permanent basis.
Every Dollar Collected Flows Back
5:17pm: No one likes to talk about taxes, but we can ensure a fair and progressive tax rate in Singapore. This will fund our common aspirations for tomorrow.
Fiscal Outlook
5:20pm: As a result of a swift and decisive response, a stronger than expected rebound in the economy and businesses, less is expected to be drawn from past reserves. This brings the total drawn from past reserves of $49 billion.
From FY2023, 1% will be cut from the budget of Ministries and organs of state.
For FY2021, there is an expected $5 billion deficit. For FY2022, there is an expected deficit of $3 billion.
Where To Watch Singapore Budget Statement 2022 Live?
For those who interested to catch the live broadcast of Finance Minister Lawrence Wong’s Singapore Budget 2022 live, you can do so via the following platforms:
- Television: CNA and Channel 5
- Radio: CNA938 and Capital 958
- Browser: Singapore Budget website, Channel NewsAsia website, 8 World News and MediaCorp’s meWATCH
- YouTube: CNA and 8 World News
- Facebook: CNA and 8 World News
Pre-Budget 2022 Reading List
Finance Minister Lawrence Wong will be delivering his first Budget Statement, having taken over the post from DPM Heng Swee Keat. This year, there will likely be a smaller focus on immediate support measures due to COVID-19.
For Budget 2022, longer-term objectives are coming to the fore. One of the most prominent one is the expected increase of GST rate from 7% to 9% by around 2025. This should not be a big surprise as the government has already mentioned such a measure as far back as Budget 2018.
On the Ministry of Finance’s Facebook page itself, this measure has been discussed in various forms. Firstly, the need for it is imminent, with rising recurring public spending in the form of higher healthcare expenditure by the government.
Nevertheless, move could take place in various forms, including incremental stages. A support package – a $6 billion Assurance Package – is also already in the works, to help delay the full impact of the GST increase for up to five years. For lower-income families, this support may be extended for up to 10 years.
Read Also: GST Increase: Here’s How Much The Government Will Collect – And How Much More Will You Be Paying
Budget 2022 should also continue a strong focus on businesses. Perhaps, with less emphasis on immediate support, and more aiding longer term evolution. Several topics that have been previously tackled include foreign manpower, industry transformation and a green agenda, as well as some elements of supporting sectors that have still not recovered from COVID-19.
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