SINGAPORE - Against a backdrop of political and economic uncertainty, rapid technological change and a rise in anti-globalisation sentiment around the world, Finance Minister Heng Swee Keat delivered a Budget on Monday (Feb 20) that sought to address Singaporeans' immediate concerns while laying the groundwork for future growth.
The key measures that will likely get Singaporeans talking:
* Water prices will be raised by 30 per cent in two phases, starting from July. However, enhanced GST Voucher - U-Save Rebates will help offset the cost for households, so that 75 per cent of all HDB households will see an average increase of less than $12 in their monthly water expenses, and one- and two-room HDB households will on average have no increase in their water expenses.
* A carbon tax will be implemented from 2019, on power stations and other large direct emitters. The Government is looking at a tax rate of between $10 and $20 per tonne of greenhouse gas emissions.
* The Additional Registration Fee (ARF) for motorcycles will now be tiered. The ARF for motorcycles with Open Market Values (OMV) up to $5,000 will remain at the current 15 per cent. The next $5,000 of motorcycle OMV will be subject to an ARF rate of 50 per cent. The remaining motorcycle OMV beyond $10,000 will be subject to an ARF rate of 100 per cent.
* A personal Income tax rebate of 20 per cent of tax payable, capped at $500, for income earned in 2016.
* The CPF Housing Grant will be raised from $30,000 to $50,000 for couples who buy four-room or smaller resale flats, and from $30,000 to $40,000 for couples who get five-room or bigger resale flats.
* Diesel taxes will be restructured. A volume-based duty of 10 cents a litre will be levied on automotive diesel, industrial diesel and the diesel component in biodiesel. The annual Special Tax on diesel cars and taxis will be reduced by $100 and $850 respectively. The Special Tax reduction will offset the impact of diesel duty for the majority of drivers.
Mr Heng noted that while Singapore achieved economic growth of 2 per cent last year, there was uneven performance across sectors and a mixed showing in the labour market too.
While the unemployment rate remained low at 2.1 per cent last year, redundancies have been increasing and more workers are taking longer to find jobs.
And so the Budget offered a plethora of measures to help businesses, workers and families through the current sluggish economic landscape, while also keeping an eye on what they need to do to stay competitive in the future.
It also sets aside $2.4 billion over the next four years to implement the strategies laid out by the Committee on the Future Economy (CFE) earlier this month.
The Budget included measures aimed at building an environmentally sustainable society.
Mr Heng noted that Singapore's spending needs are increasing, and the Government must continue to spend judiciously, emphasise value-for-money and drive innovation in delivery.
To that end, he applied a permanent 2 per cent downward adjustment to the Budget caps of all ministries and organs of state from this year onwards, to emphasise the need to stay prudent and effective.
The Budget marked Mr Heng's first speech in Parliament since suffering a stroke in May last year. He returned to work in August, but has kept a low profile since, making his first public speech earlier this month at the release of the CFE's report, which he co-chaired.
His return to Parliament on Monday was greeted with support from fellow MPs, who thumped their seats as he began his Budget speech.
It was a shorter speech than the one he delivered last year, clocking in at about one-and-a-half hours - but still packed a substantial amount.
Measures for businesses
- Foreign worker levy increases for the marine and process sectors will be deferred for another year.
- To support the construction sector, the Government will bring forward $700 million worth of public sector infrastructure projects to start this year and next.
- The Government will introduce the SMEs Go Digital Programme to help SMEs build digital capabilities.
- To further support companies that are embarking on innovation, A*Star's Operation and Technology Road-mapping programme will be expanded to help 400 companies over the next four years. This programme helps companies to identify how technology can help them innovate and compete.
- For companies seeking access to intellectual property (IP), a new Intellectual Property Intermediary, a SPRING affiliate, will match them with IP that meets their needs. It will work with the Intellectual Property Office of Singapore to analyse and bundle complementary IP from Singapore and overseas.
- The Government will also support companies in the use of advanced machine tools for prototyping and testing, which may require costly specialised equipment. A*Star will provide access to such equipment, user training and advice under a new Tech Access Initiative.
- To further support local firms that are venturing abroad, the Government will commit up to $600 million in capital for a new International Partnership Fund, which will co-invest with Singapore-based firms to help them scale-up and internationalise.
- The Government will enhance the Corporate Income Tax (CIT) Rebate. Last year, the rebate was already raised from 30 per cent to 50 per cent of tax payable, capped at $20,000 each year for Year of Assessment (YA) 2016 and YA2017.
This year, the Government will further enhance the CIT rebate by raising the cap from $20,000 to $25,000 for YA2017. The rebate will remain at 50 per cent of tax payable. It will also extend the CIT rebate for another year to YA2018, at a reduced rate of 20 per cent of tax payable, capped at $10,000.
- The Government will also support its agencies to procure products and services in a way that builds capabilities in the economy and supports innovation, Mr Heng said.
For example, in the construction sector, it will introduce the Public Sector Construction Productivity Fund, with about $150 million. It will allow Government agencies to procure innovative and productive construction solutions, which may have higher costs as they may be nascent and lack scale.
- The Government will also top up the National Research Fund by $500 million, to support innovation efforts, and the National Productivity Fund by another $1 billion, to support industry transformation.
Measures for workers
- A Global Innovation Alliance for Singaporeans to gain overseas experience, build networks, and collaborate with their counterparts in other innovative cities will be introduced. It will have three programmes:
- The Innovators Academy will enable tertiary students to build connections and capabilities overseas. This academy will build on the NUS Overseas College programme, which connects students to start-ups overseas, by making these opportunities available to students from other Singapore universities.
- Innovation Launchpads in selected overseas markets will create opportunities for Singaporean entrepreneurs and business owners to connect with mentors, investors and service providers.
- Welcome Centres will help innovative foreign companies to link up with Singapore partners to co-innovate, test new products in Singapore, and expand in the region.
- A new SkillsFuture Leadership Development Initiative that will support companies to groom Singaporean leaders by expanding leadership development programmes. This includes sending promising individuals on specialised courses and overseas postings. For a start, the programme will target to develop 800 potential leaders over three years.
- The Government will make sure that skilled workers are matched to where they can best use their skills. It will make the National Jobs Bank more useful for jobseekers and employers, and work with private placement firms to deliver better job matching services for professionals.
- A new "Attach and Train" initiative for sectors that have good growth prospects, but where companies may not be ready to hire yet will be introduced. Industry partners can send participants for training and work attachments.
- An additional sum of up to $26 million a year will be committed from the Lifelong Learning Endowment Fund and the Skills Development Fund to support this and other initiatives aimed at helping workers, including the Career Support Programme, the Professional Conversion Programme and the Work Trial Programme.
- The Additional Special Employment Credit will be extended till end-2019. Under this scheme, employers will receive wage offsets of up to 3 per cent for workers who earn under $4,000 per month, and who are not covered by the new re-employment age of 67 years old.
Measures for the environment
- The Government will implement a carbon tax on the emission of greenhouse gases from 2019. This will be applied upstream, for example, on power stations and other large direct emitters, rather than electricity users. It is looking at a tax rate of between $10 and $20 per tonne of greenhouse gas emissions, in the range of what other jurisdictions have implemented.
- The existing Carbon Emissions-based Vehicle Scheme will be extended to the end of this year, and then replaced with a new Vehicular Emissions Scheme, which will consider four other pollutants on top of carbon dioxide, so as to account more holistically for the health and environmental impact of vehicular emissions. It will run for two years, starting from Jan 1, 2018.
- The Government will also enhance and extend the Early Turnover Scheme for commercial diesel vehicles, which is aimed at encouraging the early replacement of older and more pollutive commercial diesel vehicles. The scheme is due to expire on July 31, 2017, but will now be extended for vehicle owners who turn over their existing Euro II and Ill commercial diesel vehicles for Euro VI vehicles until July 31, 2019.
- The Government will also enhance the Certificate of Entitlement (COE) bonus period for Light Goods Vehicles.
- To encourage the conservation of Newater among industrial users, the Government will also impose a Water Conservation Tax on Newater, which will be 10 per cent of the Newater tariff, starting from July 1, 2017.
Measures for families and households
- At present, about 4,000, or 8 per cent of all infants are enrolled in centre-based infant care. To meet growing demand, it will increase the capacity of centre-based infant care to over 8,000 places by 2020.
- The Government will increase annual bursary amounts for those attending Post-Secondary Education Institutions, or PSEls. The amount of increase will be up to $400 for undergraduate students, up to $350 for diploma students, and up to $200 for ITE students.
- It will also extend PSEI bursaries to more families, by revising the income eligibility criteria. About 12,000 more Singaporean students are expected to benefit, bringing the total number of beneficiaries to 71,000.
- To help households offset some of the increase in water prices, the Government will increase the GST Voucher - U-Save Rebate for eligible HDB households, by an amount ranging from $40 to $120, depending on flat type. Families living in one- and two-room HDB flats will receive $380 of U-Save rebates each year compared to $260, while families living in three- and four-room HDB flats will receive $340 and $300 per year respectively, compared to $240 and $220.
- To help lower-income households with expenses, there will be a one-off GST Voucher - Cash Special Payment of up to $200 for eligible GST Voucher - Cash recipients. This is in addition to the regular GST Voucher - Cash. In total, eligible Singaporeans can receive up to $500 in cash for 2017.
- The Service and Conservancy Charges (S&CC) rebate will be extended and raised this year. One- and two-room HDB households will receive a total of 3.5 months of rebates, while three- and four-room households will receive 2.5 months of rebates.
- The Government will launch a Third Enabling Masterplan to better integrate Persons with Disabilities into the workforce, and to give more support to their caregivers.
- The Voluntary Welfare Organisations-Charities Capability Fund will get up to $100 million in additional funding while self-help groups will receive an additional $6 million in grants.