This article was first published on Feb 3, 2015
Tax reliefs rather than the popular personal tax rebates given in 2011 may be in store in this year's Budget, due on Feb 23.
That was the hint from Deputy Prime Minister Tharman Shanmugaratnam in a sneak peek he gave on Sunday. Mr Tharman, who is also Finance Minister, will deliver the Budget.
Analysts expect this year's jubilee Budget to contain goodies for all Singaporeans, particularly the so-called "sandwiched class" squeezed by rising costs.
They might take the form of education and training subsidies as Mr Tharman on Sunday put the focus on enabling "good and fulfilling careers" for the young and middle-aged in a Budget that "looks towards the future".
OCBC economist Selena Ling said: "I suspect this might have a link to SkillsFuture - the idea the Government is going to be working more closely with the Ministry of Education and Singapore Workforce Development Agency to ensure students get a better head start where hiring intentions are strongest, and where there is better career advancement."
Mr Tharman chairs the SkillsFuture Council, formed in September last year to spearhead a national push towards an integrated system of education, training and career progression.
Other initiatives could include a focus on attracting more foreign firms to offer employees here "a professional training track alongside the job", or even more flexibility in drawing on the Central Provident Fund to finance training and education, said Bank of America Merrill Lynch economist Chua Hak Bin.
Many analysts also expect the Budget to target the middle class. Mr Tharman said on Sunday that "for families with children... Singapore has to be a good place to raise your children - it's got to be affordable, and it's got to be a quality education".
On this front, initiatives to help families and children would be "a natural thing", said Dr Chua.
More targeted scholarships to help with rising education costs, as well as partially subsidised kindergarten fees, could help the middle class and fit with government efforts to support young families, he said.
Tax rebates similar to those offered in the 2011 pre-election Budget are not out of the question. "The Government pulled off an $8 billion Pioneer Generation Package last year, so that tells you about the health of its fiscal resources," said Ms Ling.
But DBS economist Irvin Seah believes cash payouts similar to the Growth Dividends given out in Budget 2011, subject to a Singaporean's wealth, are more likely. On average, 80 per cent of Singaporeans got $500 to $700 in Growth Dividends. About $1.5 billion was paid out.
The bulk of the middle-income group does not pay taxes, so tax rebates will not directly benefit most of them, said Mr Seah.
PwC Singapore tax leader Chris Woo agreed: "Everyone's saying this will be a hongbao Budget but, to me, a tax rebate is a one-off relief. It will ease cash flow but it's not really 'building for the future'."
Analysts believe that tax relief - on home loans or health insurance - are more likely tracks the Government might take.
"In view of the rising costs of housing in recent years, one way to help the middle class may be to allow tax relief for mortgage interest incurred on owner-occupied properties," said Mr Daniel Ho, director of taxes at Deloitte Singapore.
EY human capital partner Wu Soo Mee believes tax deductions for medical-related insurance policies would be helpful for the middle class. "Enabling a tax write-off for health insurance premiums will not only encourage more taxpayers to take up health insurance policies for themselves and their families, but also offer them greater access to preventive and emergency health care," she said.
