Tax hikes, more spending on healthcare? 5 things to look out for in Budget 2018

Just like how you would plan your expenses for a road trip, Singapore's Budget is a proposed plan on things the country needs and how much money we should spend. Here's the Budget process, in a nutshell.
Many expect the goods and services tax to be raised, possibly in phases. It was last raised in 2007 by two percentage points to 7 per cent.
Many expect the goods and services tax to be raised, possibly in phases. It was last raised in 2007 by two percentage points to 7 per cent. PHOTO: ST FILE

SINGAPORE - Singapore's Budget statement for this year will be delivered on Feb 19 at 3.30pm in Parliament by Finance Minister Heng Swee Keat.

What can Singaporeans expect from the two-hour speech? Here are five key things to look out for.

1. Taxes going up

Tax hikes have been a hot topic since Prime Minister Lee Hsien Loong foreshadowed them in November 2017. As spending on healthcare and infrastructure is set to rise rapidly, there may be a need for new taxes or higher tax rates.

Mr Lee had talked about how the Government will have to "plan ahead, explain to Singaporeans what the money is needed for, and how the money we earn and we spend will benefit everyone, young and old".

Many expect the goods and services tax to be raised, possibly in phases. It was last raised in 2007 by two percentage points to 7 per cent. An e-commerce tax could also be on the cards.

The question that remains: When will these changes kick in? The Government has said it will give "enough time" for firms and citizens to adjust.

2. Bigger healthcare bill

Budget 2017 saw $10 billion allocated for healthcare spending. As Singapore ages, this is set to rise.

Mr Heng has previously estimated that healthcare spending will rise by at least $3 billion in total by 2020, and has said that Budget 2018 will feature more support for seniors.

 
 
 

3. Supporting seniors with community help

Supporting the elderly will not be a task for only the Government.

Noting that a lot of financial support was introduced in previous Budgets, Senior Minister of State for Finance Indranee Rajah has said the Government is now looking at community support.

Budget 2018 will encourage volunteerism to help the elderly age in place, she added.

4. Helping firms transform

The push to transform Singapore's industries and upgrade workers' skills will continue in Budget 2018.

The Government wants to facilitate more innovation and transformation, and build deep capabilities in firms and workers, Minister for National Development and Second Minister for Finance Lawrence Wong said in a Facebook post earlier this month.

With the broad-based Productivity and Innovation Credit tax incentive expiring this year, it is not clear if new schemes or grants will replace it.

5. Security spending to rise

Amid high terror threat levels, security spending will be a "very major item" in the Budget, Mr Heng said earlier this month.

In 2016, the Home Affairs, Defence and Foreign ministries spent $19.5 billion on security, comprising 27 per cent of total government spending for that financial year.