BUSINESSES and households affected by the economic downturn have been promised special attention from the Government in next year's Budget to help them get through tough times.

Companies will get help with their costs and cashflow so that they can stay 'strong and competitive', Finance Minister Tharman Shanmugaratnam said yesterday.

And there will also be support for households who have been affected by job losses, he added.

Officiating at the opening of the Pioneers' Memorial Hall of the Ee Hoe Hean Club in Chinatown, Mr Tharman said the emphasis on these groups will be one of three considerations guiding Budget 2009.

Another key consideration will be to use the Budget to support economic growth and job creation.

'With the economy rather than inflation being the key priority, the Budget should be expansionary,' said Mr Tharman, echoing comments made by Senior Minister Goh Chok Tong last week.

Though SM Goh did not elaborate either, economists interviewed have cited possible measures like tax cuts and resuming of public sector construction projects - 'pump priming' measures that would keep the wheels of the economy turning.

Mr Tharman also said that because the downturn is unlikely to be short-lived, the Government's Budget initiatives will be aimed at providing help over a few years, rather than providing 'a quick stimulus' to the economy.

But he also warned that the approach to helping Singaporeans should not change. 'The best way we can help is not through unconditional handouts, but by helping Singaporeans stay employed, and supporting everyone to get retrained and upgraded,' he said.

'By keeping to this approach, taking measures to help our businesses stay competitive and seize new opportunities, Singapore will emerge stronger and fitter from this crisis, and better prepared for the eventual upturn in the global economy,' he added.

Minister Mentor Lee Kuan Yew also touched on the economic crisis at a separate community event in Tanjong Pagar yesterday, saying that Singapore's reserves can see the country through the crisis.

He added that by the next Budget, the Government will be ready to decide on assistance programmes for the low-income.

'After studying the situation carefully, we have to make a realistic estimate of how much we can afford in additional U-Save, Workfare and other alleviating measures,' MM Lee said.

'Much depends on how long and deep this recession will be.'

Reacting to the comments, PricewaterhouseCoopers tax partner Koh Soo How said he believes the Government would take care of small and medium-sized enterprises (SMEs) this time.

But while tax rate cuts would seem like the immediate thing to do, this might not benefit the companies that need help, he said.

'Cutting tax rates might be drastic, especially since they were recently cut. Every time we cut corporate tax rates, the goods and services tax is usually upped... because it puts pressure on the Government when it comes to revenue,' Mr Koh said.

A better and easier method might be to increase the tax-free threshold, so that companies do not have to pay tax if they earn below that amount. Or give special grants to offset taxes, Mr Koh said.

Companies interviewed wanted help with their fixed costs.

Madam Shen Liling, 40, who manages an SME that distributes household products, said rental reductions, subsidies or rate freezes, by authorities such as the HDB would go a long way to help.

Calling for a reduction in levy rates on employees holding work permits, she said she might have to sack these workers if the situation worsens.

Mr Leslie Wou, 37, of interactive media company Activate, suggested rolling out more training funds or grants. 'At this time, we could send employees for more courses, higher education learning, and by the time the economy picks up, they will be trained and ready.'

serl@sph.com.sg

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