Taxes are increasing and the government is giving out hong baos. What’s in store for Singapore in the years to come? Find out with our Singapore Budget 2018 summary.
Earlier today, Minister of Finance Mr. Heng Swee Keat presented Budget 2018. He covered a lot of ground in his two-hour speech, but what do we need to know? Find out with our Singapore Budget 2018 summary.
Mr. Heng began his speech on a positive note, citing the stellar growth of Singapore’s GDP and productivity. GDP has grown by 3.6%, up from 2.4% in 2016. And productivity growth was at 4.5% value-added per hour worked — the highest it’s been since 2010.
He spoke about how the country should prepare for the future, especially when considering three major shifts: 1) the shift of the global economy towards Asia; 2) emergence of new technologies; 3) dealing with the country’s ageing population.
The goods and services tax (GST) will increase from 7% to 9% between 2021 to 2025. Expect that it will need to be done sooner than later, Mr. Heng said. This move is necessary to manage future expenditure, he added.
By increasing GST by 2%, the government will receive about 0.7% of GDP per year. “This boost in revenues will be vital in closing this gap,” Mr Heng said.
However, to ease the transition, Mr Heng also added that vouchers will be given to lower-income families. The Permanent GST Voucher scheme will be enhanced. And there will also be offset packages to help lower to middle-income Singaporeans adjust to the GST increase.
Mr. Heng said that this will be implemented to discourage the consumption of tobacco products.
Buyer stamp duty (BSD) is set to increase for private residential properties from 3% to 4%. This applies to all properties with a value of more than S$1 mil.
Currently, consumers aren’t being taxed for buying imported digital products and services, such as apps, consultancy services, music etc. In 2020, GST will be introduced on such products. The government will also be discussing on how GST can apply to the importation of goods through e-commerce.
In the government’s efforts to combat climate change, companies will be expected to pay a carbon tax in 2019.
The government will, in turn, provide more grants and support to companies to help them reduce their carbon emissions and improve energy efficiency.
Though this will likely increase the cost of electricity and gas, the impact is estimated to be only 1%. To help lower-income households cope with the increase in cost, the government will be giving HDB households S$20 more annually for three years.
Starting in 1 April 2019, the foreign domestic worker levy will rise from SS$265 to S$300 for the first worker and to S$450 for the second worker.
However, families that need help caring for young children, the elderly, or family members with disabilities will continue to get a concession of S$60.
There will be a one-off SG Bonus (Hong Bao) of $300, 200, $100, depending on your income.
To help firms with age growth, the government’s Wage Credit Scheme (WCS) will be extended until 2020. The WCS helps co-fund wage increases of Singaporeans with salaries up to S$4,000. Co-funding will be 20% for 2018, 15% for 2019 and 10% for 2020.
The government will also be encouraging three enablers to boost the economy: Innovation, Capability, and Partnership.
“We want to give every Singaporean the best chance to realise his/her potential,” said Mr. Heng. The government plans to continue building Singaporeans’ “deep skills” and capture opportunities in the region and beyond through SkillsFuture.
There will also be more support for those in the middle of career transitions and job seekers.
The government will spend more on education, increasing annual Edusave contributions from S$200 to S$230 for primary school students, and from S$240 to S$290 for secondary school students with effect from 2019.
Lower-income students will receive more financial assistance, from S$750 to S$900 for pre-university students. In addition, the government will pay for more meals for secondary school students. Financial education will also be introduced in the curricula at Polytechnics and ITEs.
Singapore’s population is ageing — it is estimated that more than 900,000 of the population will be comprised of senior citizens by 2030. Thus, healthcare and social expenditures are expected to rise, overtaking education.
The Community Network for Seniors, which helps the elderly stay active and engaged, will be expanded nationwide by 2020. The Health Ministry will now oversee social and health-related issues for seniors.
In the works are updating and adding new infrastructure, like the high speed rail (HSR) from Singapore to Malaysia.
Soon, Singaporeans will be able to pay for more goods and services through e-payments throughout the island.
Proximity housing grants (PHG) will increase from S$20,000 to S$30,000 for those buying resale flats to live near or with their family. There will also be enhanced PHG of S$15,000 for singles who are the sole caregivers or support for their parents, to buy resale flats to live with parents.
Singles who buy a resale flat near their parents will only receive a PHG of S$10,000. PHG criteria has also been simplified for its definition of what is “near” — (used to be in the same town, within 2km) now, the definition means “within 4km”.
HDB household rates will be extended for another year. The government has set aside S$126 mil benefiting around 900,000 households.
Want more than this Singapore Budget 2018 summary? To watch the entire speech, click here.
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