SINGAPORE - Singaporeans expected a Jubilee Budget to celebrate Singapore’s 50th year of independence.
While Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam did not quite frame his announcements as Jubilee Year giveaways, the Budget announced on Monday gave middle-income families, older Singaporeans and companies quite a bit to be happy about.
Here are 15 things to cheer about in Budget 2015:
1. Money to improve your skills via new SkillsFuture scheme
Every Singaporean aged 25 and above will get an initial $500 of SkillsFuture Credit from the Government, which will be topped up at regular intervals and will not expire. They can either choose to go for a short course with the $500, or accumulate credits for more substantial training in the future.
2. Cut in maid levy
From May 1, households eligible for the Foreign Domestic Worker Levy Concessionwill enjoy a further discount on the monthly levy. Employers of foreign maids now pay $265 a month in levies, or $120 if they qualify for a concessionary rate. The concessionary rate will be cut to a mere $60. The concessionary levy will also be extended to families with children aged below 16 years, up from below 12 years old.
3. More money in your CPF
The income ceiling for CPF contributions will be raised from $5,000 to $6,000 from next year onwards.
An additional 1 per cent interest will be applied to the first $30,000 of CPF savings for those aged 55 and above next year, on top of the existing 1 per cent extra interest on the first $60,000 of savings. This means that the first $30,000 in Special, Retirement or Medisave accounts can earn up to 6 per cent interest.
4. Silver Support Scheme to help lower-income elderly
Under the Silver Support Scheme, the bottom 30 per cent of Singaporeans aged 65 and above will get payouts of between $300 and $750 every three months. The average low-income senior citizen will receive $600.
They will be automatically eligibile. Amounts will depend on their lifetime wages, housing type and household support. The Silver Support Scheme will be implemented around the first quarter of 2016.
5. Seniors’ bonus
In the interim before the Silver Support Scheme is in effect, senior citizens who are aged 65 and above, live in Housing Board flats, and whose assessable income for 2014 is $26,000 or less, will receive a one-off “Seniors’ Bonus”.
The bonus of either $150 or $300 will be in the form of Goods and Services Tax (GST) vouchers and will be on top of the vouchers for those aged 21 and above. The amount seniors will receive will be based on the annual value of their home as at Dec 31, 2014.
6. $50 more in GST Vouchers
1.4 million Singaporeans will get $50 more in Goods and Services Tax (GST) Vouchers from this year. The increase in GST Voucher quantum across the board means that eligible individuals will receive up to $300 in cash.
The GST Voucher, introduced in 2012 to help lower- and middle-income households with their expenses, is given in three parts - cash, Medisave and Utilities-Save, which provides HDB households with a rebate to offset their utilities bills.
7. Personal income tax rebate
Taxpayers will enjoy a one-off tax rebate of 50 per cent, capped at $1,000, for the year of assessment (YA) 2015 for income earned in 2014. Some 1.5 million taxpayers will benefit from the rebate.
8. Waiver of exam fees
Examination fees for Singaporeans sitting for national exams in Government-funded schools will be waived from 2015. This covers fees for the Primary School Leaving Examination (PSLE), and GCE N, 0, and A levels. Students and their families will save up to $900 for these exams.
9. More affordable childcare
The Government will start a new Partner Operator Scheme to complement the Anchor Operator Scheme for child-care centres.
10. Road tax rebates
Drivers will enjoy a one-year road tax rebate of 20 per cent for cars, 60 per cent for motorcycles and 100 per cent for the small number of commercial vehicles using petrol.
On the downside though, petrol duty will go up, but the road tax rebate will offset about two-thirds of the impact of that.
11. More tax deductions for donations made
Tax deductions for donations made this year will rise from 250 per cent to 300 per cent.
12. Wage credits for companies
The Government is extending the Wage Credit Scheme (WCS), which was set to expire this year, to 2016 and 2017, but at half the current rate of subsidy. The move is to give Singapore employers more time to adjust to the tight local labour market as they continue to restructure.
In the next two years, the Government will co-fund 20 per cent of the wage increases that are given to Singaporean employees earning a gross monthly wage of up to $4,000. This is down from the current 40 per cent subsidy for the unchanged wage segment.
13. Tax rebate for companies
Companies will get a 30 per cent rebate up to a cap of $20,000 on their payable taxes for the year.
14. More support for local firms to go global
The Government announced three measures to support local companies to internationalise - a key strategy to help them grow their revenue.
First, the Government will raise the support level for small and medium enterprises (SMEs) for all activities under IE Singapore's grant schemes from 50 per cent to 70 per cent for three years.This will benefit about 700 projects.
The Government will also enhance the Double Tax Deduction for Internationalisation scheme to now cover salaries incurred for Singaporeans posted overseas. This will provide greater support to companies venturing overseas, by co-sharing their risks and initial costs of expanding overseas, as well as creating skilled jobs for Singaporeans.
The third measure is a new tax incentive, the International Growth Scheme (IGS), to provide support to meet the needs of larger Singapore companies in their internationalisation efforts.
Qualifying companies will enjoy a 10 per cent concessionary tax rate on their incremental income from qualifying activities. It will encourage more Singapore companies to expand overseas, while anchoring their key business activities and HQ in Singapore
15. More tax revenue
The super-wealthy won't be smiling, but the rest of the population will. The tax rate for those in the top bracket of incomes will go up, and is expected to raise additional revenue of $400 million a year when it comes into effect.
For those with a chargeable income above $320,000, the tax rate will go up by 2 percentage points to 22 per cent in 2016 from 20 per cent currently, with smaller increases for others in the top 5 per cent.
4 things some won't be too happy about
1. Top earners to pay higher income tax
Marginal tax rates will go up for the top 5 per cent of income earners who earn at least $160,000.
For those with a chargeable income above $320,000, the tax rate will go up by 2 percentage points to 22 per cent from 20 per cent currently, with smaller increases for others in the top 5 per cent. For someone earning $250,000 a year, his effective tax rate will increase from 8.3 per cent to 8.5 per cent, with additional tax payable of $400.
This will take effect in Year of Assessment 2017.
2. Higher petrol duty charges
Petrol duty rates, which have remained unchanged since 2003, will go up, with immediate effect. Duty rates for premium grade petrol will be increased by $0.20 per litre, and intermediate grade petrol by $0.15 per litre.
But because of falling oil prices, pump prices after the petrol duty changes would remain lower than the levels in the last two and a half years.
3. Companies to contribute more CPF for older workers
From Jan 1, 2016, CPF contribution rates for workers aged 50 to 55 will match the level of those younger than them. The contribution rate for these workers will go up by 2 percentage points - 1 percentage point from the employer, and 1 percentage point from the employee. Employer contribution rates for those are older than 55 will also go up.
To help companies absorb the cost increase, the Temporary Employment Credit will be extended by two years, and will be raised to 1 per cent of wages from the current 0.5 per cent, among other things.
4. Productivity and Innovation Credit (PIC) Bonus scheme will not be extended
The scheme, which was introduced to encourage businesses to take advantage of the main PIC scheme, will not be extended after this year. This is because the transitional measure has been successful in spreading the culture of productivity amongst small and medium enterprises.