H. Fiscal Position

H. Fiscal Position

1. 201. Now let me touch on our fiscal position. Our prudent fiscal approach remains one of Singapore’s core strengths. We manage our public finances with discipline and care — ensuring that revenues are sufficient to meet expenditures, and that every dollar is used responsibly, for the benefit of both present and future generations.
2. 202. The changes we made in the last term of Government have put Singapore on a healthy and sound fiscal footing. We have a tax and transfer system that is fair, progressive, and anchored on shared responsibility. That gives us the capability and confidence to move forward.

Tax Changes

1. 203. This year, I will adjust vehicle taxes.
   1. a. Currently, car buyers are taxed through the Additional Registration Fee.
   2. b. To encourage timely renewal of the vehicle population so that it is safer and less pollutive, we provide a Preferential Additional Registration Fee, or PARF, rebate for cars deregistered by their 10^th year. This is sized as a percentage of the Additional Registration Fee paid.
   3. c. Electric vehicles are less pollutive than conventional petrol cars. As EVs become more common, the need to encourage early deregistration through the PARF rebate is reduced.
   4. d. Therefore, I will reduce the PARF rebate by 45 percentage points. I will also lower the PARF rebate cap from $60,000 to $30,000. This will apply to all cars registered with Certificates of Entitlement obtained from the next bidding exercise.
2. 204. Next, to discourage the consumption of tobacco products, I will implement a 20% increase in tobacco excise duty across all tobacco products with effect from today.
3. 205. The details of these tax changes are in the Annex.

FY2025 and FY2026 Fiscal Position

1. 206. Sir, let me summarise our fiscal position.
2. 207. For Financial Year 2025, we expect higher revenues.
   1. a. This is partly due to the better-than-expected economic performance which I shared earlier.
   2. b. Another key driver is the increase in our Corporate Income Tax collections.
   3. c. In Financial Year 2024, Corporate Income Tax contributed 4% of GDP — significantly higher than in past years. I talked about this in our last Budget.
   4. d. Based on the latest estimates, we expect Corporate Income Tax collections to increase further in FY2025.
   5. e. We also saw higher asset-related revenue collections such as Vehicle Quota Premiums and Stamp Duty, driven by strong demand for private vehicles and properties.
3. 208. Therefore, I expect to end FY2025 with a surplus of $15.1 billion, or 1.9% of GDP.
4. 209. For FY2026, I expect a smaller surplus of $8.5 billion, or 1% of GDP.
5. 210. Our approach remains to keep the budget balanced over time, and across the ups and downs of the economic cycle.

Fiscal Outlook from FY2027

1. 211. Looking beyond this Budget, our public finances remain sound and resilient.
2. 212. On the revenue side, we will proceed with the implementation of the Top-up Tax under Pillar Two of BEPS. This will raise the effective tax rate for large multinational enterprises operating in Singapore to 15%. So we expect higher corporate tax collections from FY2027 onwards.
3. 213. At the same time, our spending needs will grow across multiple fronts.
   1. a. First, on external relations and security. We will need to invest more in expanding our overseas partnerships, and in building up deeper capabilities to keep Singapore safe and prepared for emerging threats.
   2. b. Second, on the economic front. Even with the BEPS initiative, many other countries are rolling out generous incentives to re-shore and on-shore major investments. That is the reality of today’s competitive landscape. To remain attractive and stay in the game, we must update and strengthen our investment promotion toolkit. That’s one reason why MTI’s expenditure has risen sharply in this Budget, and why it is likely to remain elevated in the years ahead.
   3. c. Third, on social needs. We had anticipated higher spending for healthcare, and provided for it through the GST rate increase. But healthcare is not the only social need we must address. We also need to strengthen assurance for families, enhance social mobility, and boost retirement adequacy — so that Singaporeans can face each stage of life with confidence and peace of mind.
   4. d. Finally, we must prepare for longer-term challenges. We have set aside resources through specific funds for major future needs, including critical infrastructure investments for our energy transition and coastal protection. In this Budget, we will make further top-ups to the relevant funds to support the development of Changi Airport, as well as our longer-term economic strategies.
4. 214. We therefore expect both revenues and expenditures to continue rising. The Government will manage this increase carefully, ensuring that spending remains supported by revenues, and consistent with our objective of maintaining a balanced budget over the medium term.
5. 215. Sir, our sound public finances give us the ability to act decisively and to invest where it matters most. This puts Singapore in a very different position from many other countries, where governments are constrained by debt and deficit pressures, and forced into difficult trade-offs over what to cut.
6. 216. In contrast, we begin this term of Government in Singapore on a firm fiscal footing. We are therefore able to invest meaningfully and responsibly in policies and programmes that benefit all Singaporeans — now and in the years ahead.

ANNEXES

• Annex H-1: Tax Changes ( 233 KB)
• Annex H-2: Fiscal Position In FY2026 ( 184 KB)