Memorable Singapore Budgets

SINGAPORE'S Golden Jubilee Budget is expected to be one for the books. The Government has promised a "Budget for the future", one that will open a new chapter in Singapore's growth story.

Over the years, the annual Budget address has been a platform for the Government to formalise new policy directions, counter fresh concerns, and even let off some fireworks to wrap up a boom year. Insight picks 10 of the most memorable Budgets since the start:

Apart from being the first Budget for a newly independent Singapore, this was notable for its political tone.

Then Finance Minister Lim Kim San pledged that Singapore would never embark on any policies to cause rifts with Malaysia.

He also called on Malaysian leaders to talk with their Singaporean counterparts to discuss how to work together.

"Let us sit round the table, ministers and officials, instead of each country being forced to work out how each can do without the other," Mr Lim said.

Those on middle incomes burdened by high marginal tax rates had cause to cheer. A more equitable tax regime was introduced.

Noting that income tax ceilings had been raised three times in two decades, the Government said it did not want high tax rates to discourage people from working harder.

More tax cuts came in 1980, when technicians, engineers, managers and professionals were found to be carrying the greatest burden of income tax.

Married women with a secondary school education were encouraged to have more children, as the Government grew concerned about the quality of the workforce.

It broadened its tax incentives for "better-educated" mothers to include non-graduates. Mothers with five GCE O Levels credit passes were now allowed to claim higher child relief. Before, only university graduates qualified.

Then, in 1987, the "stop-at-two" campaign officially gave way to "three, or more if you can afford it" when the Government rolled out tax incentives to encourage parents to have a third child.

And in 1990, more carrots were dangled for families to have their second child earlier, as delayed child-bearing posed a threat to workforce growth.

A GST offset package brought some relief to households which were worried about the new 3 per cent Goods and Services Tax which would take effect in April the next year.

The introduction of the GST was part of broader tax reform that also involved lowering the corporate tax rate from 30 per cent to 27 per cent.

"In the long term, Government aims for a 25 per cent corporate tax rate," said then Finance Minister Richard Hu.

The lower corporate tax would boost Singapore's competitiveness and the GST would help make up for the loss in revenue.

Income earned from Singapore's past reserves came under the Budget spotlight, as the Government decided to lock up half of its annual net investment income (NII).

Before 2001, NII accrued fully to current reserves and was all spendable. The new 50:50 rule was intended to safeguard against pressures for more social spending.

Budget 2008 later loosened this rule slightly by replacing NII with net investment returns, which includes capital gains - and not just interest and dividend income - in the definition of returns.

The Progress Package introduced the Workfare Bonus, giving a leg-up for the first time to older lower-wage workers who were on the wrong side of the skills gap. A Singaporean twist on welfare, Workfare tops up the pay of those who keep working.

Workfare became a permanent scheme the following year, when then Second Minister for Finance Tharman Shanmugaratnam announced that the Workfare Income Supplement would join home ownership, health care and retirement savings as the "fourth pillar" of social security in Singapore.

Budget 2006 was also the first time "growth dividends" were given out in cash, rather than through a shares scheme where holders can opt to earn dividends over time, or to encash their shares. Citizens got their payouts of $200 to $800 in May, and the General Election was held that same month.

A $1.8 billion surplus-sharing hongbao was handed out after Singapore ended the 2007 fiscal year expecting a bumper budget surplus of $6.4 billion.

Thanks to a buoyant property market, Singaporeans also received goodies such as personal income tax rebates of up to $2,000, and "growth dividends" ranging from $100 to $400 in cash.

The Resilience Package, delivered during the Global Financial Crisis, was the largest basic deficit ever budgeted by the Government, at $14.9 billion, or about 6 per cent of GDP.

It set aside a whopping $20.5 billion to be pumped into saving jobs and stimulating bank lending.

To fund its temporary extraordinary measures, the Government even sought the permission of then President S R Nathan to perform an unprecedented drawdown of past reserves, to the tune of $4.9 billion.

In the end, the recession was milder than feared and the Government drew just $4 billion, which it returned to the pot in 2011. And the basic deficit ended up at $6.4 billion.

The last election-year Budget announced a "growth dividend" of $100 to $800 to be paid in cash to each citizen. The popular personal income tax rebate of up to $2,000 also made a reappearance.

These goodies came as the rising cost of living emerged as a key issue in the election run-up. Finance Minister Tharman Shanmugaratnam acknowledged the concerns in his speech.

He said he would share Budget surpluses with Singaporeans, but emphasised that the "main way" to deal with rising prices is to grow incomes over time.

The Pioneer Generation Package set aside $8 billion to help Singapore's first generation of pioneers pay for the cost of their health care, with no strings attached.

The subsidies and Medisave top-ups for 450,000 Singaporeans for life was one of the most generous Budget packages ever.

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