Thank you for responding enthusiastically to our call for your views for Budget 2011. We have seen a lively and fruitful discussion on the Budget over the past few months on a wide variety of issues. In total, we received more than 1,800 suggestions and feedback during the 10 weeks leading up to Budget 2011. We are grateful to you for sharing your thoughts with us, and we have taken into consideration your suggestions for Budget 2011.
Coping with the Rising Cost of Living
Many of you have suggested ways on how the Government can help Singaporeans to cope with the rising cost of living.
One of the ways suggested to cope with the rising cost of living was to reduce the direct taxes or increase the grants for lower-income and middle-income Singaporeans. Some measures in Budget 2011 which address this include:
- A one-off ‘Grow & Share’ Package that will benefit all Singaporeans, comprising:
- Growth Dividends for all adult Singaporeans
($100-$800, +$100 for NSF/Men)
Additional Utilities-Save (U-Save) and Service and Conservancy Charges (S&CC) rebates for households
($235-$360 for U-Save rebates, 1-3 months for S&CC rebates)
- CPF Medisave top-ups for senior Singaporeans aged 45 and above
($200-$700 for incomes below $100,000)
- Child Development Credit for our children ($300-$400)
- Workfare Special Bonus for working Singaporeans on the WIS scheme
(50% of WIS for 2011, 25% for 2012, 25% for 2013)
- Personal Income Tax rebates for tax-paying Singaporeans
(20% rebate up to $2,000)
- Topping-up of funding to Self-help Groups, Voluntary Welfare Organisations, School Advisory Committees/School Management Committee funds and SPED school boards
- Abolishment of radio and TV licenses. All those who have paid for this year will have the fees refunded to them.
- A Special Housing Grant (SHG) to help lower income families own their own homes and make a first-time BTO purchase from HDB, on top of the existing Additional Housing Grants.
- Restructuring of personal income tax schedule to make it more progressive. All taxpayers will pay less income tax with the restructuring. This will take effect from Year of Assessment 2012 (YA2012).
For Families with Children
To those of you who have families with children, we noted your concerns that raising children should be a joy and less of a financial burden.
Greater support will be provided for children from lower-income families to get the best start in life through education. Besides the Child Development Credit scheme as part of the ‘Grow & Share’ Package, other measures include:
- Enhanced pre-school assistance for Lower-income Families by broadening the current Kindergarten Financial Assistance Scheme (KiFAS) and Centre-based Financial Assistance for Childcare scheme (CFAC). This will help lower income families.
- Increased support for polytechnic and university students from lower- and middle-income families through higher bursaries, and extending the repayment period for their loans.
For Our Seniors
Not forgetting our seniors, who have contributed much to Singapore’s social and economic development, we have also introduced measures to ensure their well-being, especially in healthcare. Besides the topping up of CPF Medisave Accounts of Singaporeans aged 45 and above as part of the ‘Grow & Share’ Package, the other measures include:
- ElderCare Fund top up ($700 million)
- Medifund top-up ($500 million)
- Independent Daily Living Package – $20 million set aside to help the elderly live independently and stay active within the community.
- A new Community Silver Trust – $1 billion set aside to provide one-to-one matching for donations to VWOs that provide long term care to Singaporeans.
For the Vulnerable
We have also considered the needs of the vulnerable members of our society, and made sure they too will benefit from our inclusive growth package.
- Revision to Public Assistance rates. For a single-person household, PA rates will go up from $360 to $400 a month. Corresponding adjustments will be made for larger households and for the children.
- Comcare Fund top up ($500 million) to ensure that needy Singaporeans continue to receive help in picking themselves up, even in years when our economy is down.
- 5-year extension of 250% tax deduction for donations to Institutions of a Public Character (IPCs). This will help incentivise future donations.
Recognising hard work and enhancing employability
We noted your concerns on the need to recognise Singaporeans’ efforts in working hard, and their contributions to the economy. Many of you are also keen for government support to help you stay current in your skills.
Besides personal income tax rebates for YA2011 and tax reductions from YA2012, Workfare Special Bonus will be given out in 2011, 2012 and 2013.
We will also restore the CPF contribution rate to 36%, and increase the salary ceiling from $4,500 to $5,000 to further improve retirement adequacy.
To encourage training for older, low wage workers, we have introduced the Workfare Training Scheme (WTS) in Budget 2010. In Budget 2011, we have announced increase in both the capacity and quality of training, as well as enhanced subsidies for professionals, managers, executives and technicians (PMETs) who wish to upgrade themselves.
Spurring the growth of our economy
We noted many of your concerns on the rising cost of doing business in Singapore, which can hinder the growth of our economy and in turn reduce our ability to reap the fruits of growth and share them among fellow Singaporeans.
To address this concern, we will provide either a one-off 20% corporate income tax rebate capped at $10,000 or a cash grant of 5% of revenues capped at $5,000, whichever is higher, for YA2011. We will also continue to support the growth of our key economic clusters and help our companies internationalise.
To provide continued support for productivity driven growth, we will reinforce measures that were introduced last year, such as the National Productivity Fund (NPF), Productivity and Innovation Credit (PIC) scheme and Continuing Education and Training (CET).
For the Productivity and Innovation Credit (PIC) scheme, in response to feedback, we have further enhanced it such that businesses can get more tax savings or cash payouts from investing in the six qualifying PIC categories. For every dollar spent on qualifying PIC expenses up to $100,000, businesses may defer the same amount of taxes payable in the current year to the next. PIC benefits can now also be claimed for expenditure on R&D done abroad, in addition to spending on R&D done in Singapore.
Feedback not addressed in Budget 2011
Lowering GST or Exempting GST on certain goods and services
Many contributors had asked that the Government lower the current 7% GST rate and waive GST for basic necessities, to help fellow Singaporeans who have either retired or have lower incomes to cope with the rising cost of living.
We have considered these suggestions, and find that implementing them would be counter-productive towards helping the lower income Singaporeans. The bulk of GST is collected from higher income groups and foreigners, and lowering the GST rate would benefit them the most. A multi-rate GST has been shown to raise business costs, with consumers bearing the increase costs.
A better way is to maintain our GST rate, and use the resources to support the poor directly through transfers. These transfers include the GST offset package, the Workfare scheme which we introduced together with the GST, bursaries, healthcare subsidies, housing grants for low-income families; and also special transfers which we do from time to time to help the lower- and middle-income groups, as we’ve done this year. With this approach, the bottom 20% households would have received 5 times their increase in GST costs since 2007.
Marriage and Parenthood
Many contributors also voiced concerns that there was a lack of pro-family policies in the Budget. The National Population and Talent Division (NPTD) was set up in the Prime Minister’s Office in January 2011 to formulate and coordinate policies related to population and talent. The Government will continue to study the Marriage and Parenthood Package, which was last reviewed in 2008, and consider if there is a need to review the measures.
On promoting more environmentally friendly infrastructure, we have some measures in place to achieve this. For instance, more funds have been allocated to promote green environment in HDB estates such as having water catchment on roofs. Punggol Eco-town is a case in point. MND will continue to study more environmentally features for HDB estates. We have also set aside $1 billion in 2009 to fund sustainable development initiatives for five years. The Sustainable Development Fund has supported a variety of green projects, including grant incentives for green buildings and energy efficiency technologies, and will continue to do so. MEWR has recently announced that it is drafting a new law to require large energy consumers to implement energy management practices by 2013. The draft Energy Conservation Bill will be published this year to gather feedback from the public and industry stakeholders.
Nevertheless, we will continue to monitor our progress and study your suggestions for further improvements to our efforts in implementing a more environmentally-friendly infrastructure in Singapore.
We appreciate your efforts in lending your voice to help shape Budget 2011. Your feedback is invaluable to us in improving our public policies to serve you better.