SINGAPORE - Budget 2023 proposes to decisively address the pressing concerns of Singaporeans, such as inflation and long waiting time for flats, while strengthening social safety nets to keep the nation in sound shape over the longer term.
The tax system is also being made more progressive, with changes to the buyer’s stamp duty regime for properties and additional registration fee tiers for cars, to fund the Government’s growing expenses. Buyers of more expensive properties and higher-end cars will have to fork out relatively more.
The Budget unveiled on Tuesday also tackled several longstanding issues such as the low fertility rate and the retirement adequacy of seniors as the Government widened its support for citizens in need. The Central Provident Fund (CPF) monthly salary ceiling is being raised, for example, to ensure that Singaporeans have enough to draw upon in their silver years. Families will also be given more help to offset the expenses of raising children.
At the same time, there will be more measures to reduce waiting times for new Housing Board flats and more monetary support for first-timer families seeking to purchase resale flats.
Deputy Prime Minister Lawrence Wong, in his Budget speech in Parliament, loosened the Government’s purse strings in a $123.7 billion proposal – about 18.2 per cent of Singapore’s gross domestic product.
This comes amid a mixed and uneven global economic outlook, said Mr Wong, who is also Finance Minister.
While a global recession is not expected, there are major uncertainties ahead, he said. These include the possibility that the United States and European Union economies could decline more steeply than expected and tip the world into recession. The prolonged Russia-Ukraine war may also escalate and disrupt global trade, or a new Covid-19 variant may emerge.
Headline inflation is also expected to remain high in Singapore, at least for the first half of the year, said Mr Wong.
To tackle this, the Assurance Package, meant to offset the impact of the goods and services tax hike, will be further boosted to $9.6 billion, up from $8 billion following a November 2022 update and $6.6 billion announced in Budget 2022.
The enhanced package will see increases in cash payouts for eligible adult Singaporeans, and a boost of $100 to the 2024 tranche of Community Development Council vouchers to a total of $300.
Mr Wong also announced new one-off support measures under the package, such as a Cost-of-Living Special Payment of between $200 and $400 for adult Singaporeans aged above 21 who have an annual assessable income of less than $100,000 and do not own more than one property, to be given out in June.
He also unveiled a Cost-of-Living Seniors’ Bonus cash payout of between $200 and $300 for about 850,000 eligible senior Singapore citizens also to be given out in June.
Budget 2023 also had a strong focus on stepping up support for families in terms of housing and financial needs, and sharing the caregiving load between parents.
Mr Wong acknowledged that while the HDB already sets aside the bulk of its Build-To-Order flats for first-timer families, who are given priority in flat applications, the pool of first-timers covers a wide range, such as those who already have their own homes but have not received housing subsidies before.
The Government will focus on first-time applicants who are families with children, as well as young married couples aged 40 and below who are buying their first home, through measures such as giving them an additional ballot chance in BTO flat applications, said Mr Wong. He also announced enhancements to the CPF Housing Grant for resale flats for first-timer families.
To support parents with the costs of raising children, the Baby Bonus cash gift will be increased by $3,000, such that eligible first- and second-born children will now receive $11,000 and subsequent children will receive $13,000.
The Government will also increase its contributions to the Child Development Accounts, which parents can use to directly offset pre-school and healthcare expenses, said Mr Wong.
Paternity leave will be doubled from two to four weeks, with the extra two weeks given on a voluntary basis for a start, to give more time for employers to adjust, said Mr Wong.
The paternity leave allowance was last doubled from one to two weeks in 2017.
Another key move in Budget 2023 was the announcement of the increase to the CPF monthly salary ceiling, meant to help middle-income Singaporeans save more for their retirement.
This move is expected to have wide repercussions, ranging from increased employer contributions and thus business costs, to a larger pool of funds for Singaporeans to tap for housing loans as well as a bigger nest egg for retirement.
The current ceiling, set at $6,000, was last updated in 2016. Starting this September and in January 2024, 2025 and 2026, the ceiling will move up to $8,000 eventually, to keep up with rising wages.
Mr Wong also announced a slew of tax changes – increased marginal buyer’s stamp duty rates for higher-value properties to take effect on Wednesday and increased additional registration fee rates for higher-end cars to take effect from the next round of certificate of entitlement (COE) bidding.
He also unveiled a 15 per cent increase in excise duty on all tobacco products with effect from Tuesday to discourage the consumption of such products. The tobacco tax was last hiked by 10 per cent in 2018.
Mr Wong, who leads the nationwide Forward Singapore engagement exercise launched in June 2022, also provided an update on the discussions.
He noted that long wait times for new flats and rising resale home prices are key concerns for many young Singaporeans, and parents have also called for help to better balance work and family commitments, which are areas that the Government is moving sooner on in rolling out measures.
He added that to achieve shared aspirations of a fairer and more inclusive society, the Government is pursuing new strategies in some key areas – uplifting lower-wage worker salaries, better support for reskilling and upskilling, giving everyone opportunities throughout their lives to uplift themselves, and better care for the growing number of seniors.
“These are important but complex issues which require further exploration,” said Mr Wong.
“It is not just a matter of having the Government do more to provide greater assurance and support… Government actions must reinforce the values of personal effort, responsibility for the family and mutual support in the community.”
Parliament will debate the Budget and the spending plans of various ministries from Feb 22 to March 6.
