Wrapping up Budget 2015 – Thank you for your views and suggestions!
We would like to thank everyone who contributed views and suggestions for Budget 2015.
Following the launch of our public consultation exercise on 26 Nov 2014, we have received over 3,000 suggestions and feedback! These were gathered through various platforms, such as the pre-Budget Listening Points located within the heartlands, as well as REACH’s feedback channels. An MOF-REACH Pre-Budget 2015 Conversation was also held on 27 Nov 2014, during which various ideas for Budget 2015 were extensively discussed. We would like to share how some of your feedback have helped to shape Budget 2015.
Investing in the Skills of the Future
Many contributors had suggested improving the skills of blue-collar workers and diploma holders, and encouraged the hiring of mature employees. They had also asked for greater opportunities to be provided to ITE and Polytechnic Students, and increased subsidies for upgrading courses and further studies. For instance, contributors who participated in the Listening Point booths commented that “Singaporeans should be given more skill development funds to upgrade their skills”, and that there should be “education subsidies for tertiary students to further upgrade themselves.”
As announced at Budget 2015, the Government will be investing in skills upgrading and learning at every age. Through SkillsFuture, an initial credit of $500 will be given to all Singaporeans aged 25 and above for work skills-related courses. We will also provide greater support for mid-career employees, where education and training subsidies for all Singaporeans aged 40 and above will be enhanced to a minimum of 90% of training costs for courses funded by MOE and WDA.
Under the SkillsFuture Earn and Learn Programme, new Polytechnic and ITE graduates will be matched with employers for structured on-the-job training and mentorship leading to industry qualifications. There will also be substantial funding support for both trainees and employers.
The Government also announced the SkillsFuture Study Awards, which will support individuals who wish to develop the specialist skills required for Singapore’s future growth clusters. We will introduce the SkillsFuture Fellowships as well from 2016, where about 100 fellowships will be awarded each year for Singaporeans to achieve mastery in their respective fields.
Furthermore, the Government will work with companies to grow Singaporean corporate leaders under the SkillsFuture Leadership Development Initiative. This initiative will provide support for companies committed to developing a pipeline of Singaporeans to take on corporate leadership roles and responsibilities in the future.
To support these efforts, there will be stronger industry collaboration between the Government and all stakeholders such as Training Institutions, Unions, Trade Associations and employers. For more information on the various initiatives introduced, visit the SkillsFuture website.
Supporting Businesses, Promoting Innovation and Internationalisation
We also received feedback on extending the Productivity and Innovation Credit (PIC) Bonus and the Wage Credit Scheme (WCS). Contributors asked for a review on the R&D claim criteria, and to improve SME’s access to capital. We had also received requests from businesses and trade associations to hold back further increases on foreign worker levy, so that businesses could better manage the labour constraints faced.
To help businesses adjust to the tight labour market, the Government will extend the Wage Credit Scheme for 2016 and 2017 and co-fund 20% of wage increases given to Singaporean employees earning a gross monthly wage of $4,000 and below. We will also extend the Corporate Income Tax (CIT) rebate for Years of Assessment 2016 and 2017 at the same rate of 30% of tax payable, but up to a lower cap of $20,000 per Year of Assessment. The reduced cap will ensure that more support is focused on SMEs.
We will make it easier for SMEs who are engaging in innovation to apply to SPRING for Capability Development Grants (CDG) which supports a wide range of innovation activities. To make the CDG more accessible to companies, we will simplify the application process for projects below $30,000. We will also extend the enhanced funding support level, of up to 70% of costs, for three more years, to 31 March 2018.
The Government will also top up the National Research Fund by $1 billion, to fund future research efforts.
To help our companies in their internationalisation efforts, we will raise the support level for SMEs for all activities under IE Singapore’s grant schemes from 50% to 70% for three years. We will also enhance the Double Tax Deduction for Internationalisation Scheme to cover salaries incurred for Singaporeans posted overseas. This will provide greater support to companies venturing overseas, by co-sharing their risks and initial costs of expanding overseas, as well as creating skilled jobs for Singaporeans.
The Government will also introduce a new tax incentive, the International Growth Scheme (IGS), under which qualifying companies will enjoy a 10% concessionary tax rate on their incremental income from qualifying activities. This would encourage more Singapore companies to expand overseas while anchoring their key business activities and HQ in Singapore.
Meanwhile, to manage the growth of our foreign workforce, the Government has deferred this year’s round of announced levy increases for S Pass and Work Permit Holders in every sector.
Supporting Middle- and Low-Income Families, Helping Households Cope with Cost of Living
Many contributors asked for more financial aid for the middle- and low-income families, so that they could better cope with the cost of living. A contributor shared that the “cost of living in Singapore is very expensive. I think we should reduce medical, transport and living costs.” Other suggestions include increasing the GST Vouchers cash handout, and providing more financial assistance in areas such as healthcare and education.
To help lower-income households with costs of living, the Government will be increasing the quantum for GSTV – Cash by $50 across the board from 2015 onwards. We will also provide our seniors aged 55 and above with a GSTV – Seniors’ Bonus in 2015 to help them with their daily expenses. This would effectively double the GSTV – Cash that they usually receive. As for seniors aged 65 and above and who live in HDB flats, they will get an additional $300.
To provide greater support for middle-income families who are taking care of their children and elderly parents, the Government will reduce the foreign domestic worker concessionary levy from $120 per month to $60 per month. We will also extend the concessionary levy to households with children aged below 16, up from below 12 today.
There will also be a one-off rebate for Service & Conservancy Charges (S&CC), where HDB households would benefit from 1 to 3 months of S&CC rebates, based on their flat type.
To provide support for families with children, the Government has announced a new Partner Operator (POP) scheme which will improve the quality of child care teachers and reduce fees at participating centres. In addition, the Government will top up the accounts for young Singaporeans as follows:
- Aged 6 and below: $300/$600 in Child Development Account
- Students aged 7-16: additional $150 in Edusave Account
- Aged 17-20: $250/$500 in Post-Secondary Education Account (PSEA)
In addition, the Government will henceforth waive fees for national examinations (PSLE, GCE ‘N’, ‘O’, and ‘A’ levels) for Singaporean students in Government-funded schools. We will also waive examination fees for Singaporeans enrolled full-time in ITE and Polytechnics.
Providing Assurance in Retirement
We also received feedback on enhancing the CPF Scheme and the Pioneer Generation Package. Singaporeans felt that more support should be provided for the elderly, along with incentives to encourage the re-employment of older workers. For example, there was a suggestion to provide “more subsidies for the elderly” while another contributor to a REACH discussion shared that the Government should “offer financial incentives to re-employ older workers beyond age 65.”
To help Singaporeans accumulate more CPF savings during their working years, we will increase the CPF salary ceiling from $5,000 to $6,000. We will also increase the contribution cap within the Supplementary Retirement Scheme, which offers tax incentives to encourage voluntary retirement savings to complement the CPF.
For workers aged 50 to 55, the Government will take the final step to restore the contribution rates, which will go up by 2 percentage points in 2016 – 1 percentage point from the employer, and 1 percentage point from the employee. For workers aged 55 to 60, the Government will increase the contribution rate by 1 percentage point from employers. For workers aged 60 to 65, the contribution rate will go up by 0.5 percentage points from employers.
The Special Employment Credit (SEC) provides employers with a wage offset for workers above the age of 50. To support re-employment beyond 65, we will provide employers with an additional SEC of up to 3% of wages for workers aged 65 and above in 2015. This is on top of the 8.5% wage offset that employers will receive in 2015. The Government will also provide a $500 million top-up to the SEC Fund, to meet the broader funding needs of the SEC, which caters to workers aged above 50 until the scheme expires in 2016.
To supplement the incomes of Singaporeans aged 65 and above, the Government will implement the Silver Support Scheme around the first quarter of 2016. This scheme aims to support the bottom 20% of Singaporeans aged 65 and above, with a smaller degree of support extended to cover up to the bottom 30% of seniors. It will provide a cash supplement of $300 to $750 every quarter for eligible seniors. All the seniors who qualify for Silver Support will receive these supplements for life, as long as they remain eligible.
We also received feedback on tax matters, where some Singaporeans suggested increasing the income tax for higher-income earners. One participant at a Listening Point suggested that the Government “should increase the income tax for those who earn more than $200,000 annually.” Some also asked for an increase in the earned income relief, and to extend income tax relief to siblings. Others had asked to stabilise the alcohol tax environment by not further raising excise tax on wines and spirits.
In Budget 2015, the Government announced the raise in personal income tax rates of top income earners, which will take effect in Year of Assessment 2017. We will increase the top marginal tax rate from 20% to 22% for chargeable income above $320,000 and increase marginal tax rates for chargeable incomes above $160,000 to $320,000 by 1 to 2%.
To help middle-income taxpayers, the Government will provide a Personal Income Tax Rebate of 50% for the Year of Assessment 2015, with a cap set at $1,000 to ensure that this rebate would mainly benefit the middle- and upper-middle income groups.
To promote a greener living environment and encourage a shift to greener vehicles, the Government will extend the Carbon Emissions-based Vehicle Scheme (CEVS) for two years, from 1 July 2015 to 30 June 2017.
To encourage less car usage and reduce carbon emissions, the Government had also raised petrol duty rates. The duty rates for premium grade petrol had increased by $0.20 per litre, and intermediate grade petrol by $0.15 per litre. To help ease the transition to the higher petrol duties, the Government has announced a one-year road tax rebate of 20% for cars, 60% for motorcycles, and 100% for the small number of commercial vehicles using petrol. The road tax rebate will offset about two-thirds of the impact of the petrol duty change on intermediate grade petrol for a typical car.
We appreciate your views in helping to shape Budget 2015. Your feedback has been invaluable to us in improving our public policies with the aim of building a fairer, more inclusive and stronger Singapore. Although the Budget views and suggestions exercise has ended, we encourage you to continue providing us feedback through the various REACH channels.
Last updated on 26 Mar 2015