A sugar tax, incentives for green investment and a tax regime friendlier to start-ups are among Deloitte Singapore's Budget recommendations.
It noted yesterday that a sugar tax on drinks manufacturers is a possibility given that the Ministry of Health is mulling possible measures to tackle sweetened beverages and combat diabetes.
The revenue collected could be channelled to subsidising healthier food options, it added.
Deloitte also suggested measures to incentivise green investment in the light of the carbon-tax regime to be implemented this year.
Enhanced capital allowances of 200 per cent could be granted for the cost of energy-efficient and energy-saving equipment, including electric-vehicle charging infrastructure, up from 100 per cent now.
Similar allowances could also be granted on the acquisition of electric buses to encourage their adoption in the private transport market.
Priority could also be given to research and development (R&D) projects that tackle environmental issues by lowering or removing the $15 million minimum threshold for the existing R&D Pre-claim Evaluation scheme.
The Government could consider exempting a portion of the income earned by qualified staff as a way of encouraging R&D more broadly and attracting quality researchers, added Deloitte.
Other suggestions aim to encourage start-ups and small and medium-sized enterprises (SMEs).
Last year's Budget reduced benefits under the partial tax exemption and start-up tax exemption schemes, "perhaps in recognition that the intended recipients of the schemes - start-up companies and SMEs - may not have sufficient taxable profits to fully enjoy the tax exemption", noted Deloitte.
Start-ups in particular tend to suffer losses in their first few years.
Though the current tax regime allows such losses to be carried forward indefinitely, this is done at the nominal value, which erodes over time. As an alternative, Deloitte recommends preserving the real value of tax losses by indexing them, perhaps to the consumer price index or an appropriate yield based on Singapore government bonds.
"A key benefit of this recommendation to businesses would be an increase in the projected after-tax returns on their investment," it said.
"This is an important metric for start-ups looking to attract investors, since investing in such businesses is typically a long-term, multi-stage affair."
Its recommendations on personal income tax include childcare or infant-care relief for both working parents, recalibrating earned income relief to be in line with current income levels and cost of living, and providing tax relief for individuals who pay MediShield Life premiums for elderly parents and dependent children.
