1Minister for Finance Heng Swee Keat delivered the Singapore Government’s Budget Statement for Financial Year 2018 in Parliament on Mon, 19 February 2018.
2Economic growth in 2017 was 3.6%, above earlier estimates. Our productivity growth was 4.5% (as measured by real VA per hour worked), and 3.8% (as measured by real VA per worker). These are the highest figures since 2010. Real median income for Singaporeans rose by 5.3% last year.
3Budget 2018 lays the foundation for Singapore’s development into the next decade. It serves as a strategic and integrated financial plan to position Singapore for the future.
4Budget 2018 comes amidst a backdrop of three broad shifts. First: the shift in global economic weight towards Asia; second, the emergence of new technologies; and third, an ageing population in Singapore.
5Budget 2018 will address these shifts through four strategies:
(a) Developing a vibrant and innovative economy
(b) Building a smart, green and liveable city
(c) Fostering a caring and cohesive society
(d) Preserving a fiscally sustainable and secure future
A Vibrant and Innovative Economy
6Budget 2018 provides support for firms and workers in overcoming near-term challenges and preparing to capture future opportunities.
7To help firms and workers cope with near-term challenges, the Wage Credit Scheme will be extended for three more years, and the Corporate Income Tax rebate will be enhanced and extended. The Foreign Worker Levy rates for the Marine Shipyard and Process sectors will be deferred for another year. Workers will be supported by Adapt and Grow initiatives to help them reskill and enter sectors with job growth potential.
8Budget 2018 will strengthen the three key enablers that lay the foundation for the Industry Transformation Maps (ITMs) – to foster pervasive innovation throughout the economy, build deep capabilities in our firms and people, and forge strong partnerships both locally and abroad. Key schemes for each enabler are:
- To foster pervasive innovation, more support will be given to businesses to:
- buy and use new solutions, through the Productivity Solutions Grant and enhanced tax deduction on IP licensing payments to unrelated parties;
- build their own innovations through enhanced tax deductions on IP registration fees and local R&D; and
- find partners to co-create solutions through the Open Innovation Platform. R&D programmes such as Aviation Transformation Programme and Maritime Transformation Programme will also be launched.
- To build deep capabilities, we will provide more targeted support through the Enterprise Development Grant (EDG), while adjusting the Start-up Tax Exemption and Partial Tax Exemption schemes. The Tech Skills Accelerator will also be scaled-up to train more people in digital skills.
- To forge strong partnerships among companies, we will integrate various partnership support schemes into PACT. We will set up an Infrastructure Office to bring together local and international partners to develop, finance and execute infrastructure projects in Asia.
A Smart, Green and Liveable City
9The Government will embark on several projects to advance Singapore’s goal of being a Smart Nation. To prepare Singapore to meet the challenges of climate change, the Government will introduce a carbon tax of $5 per tonne of greenhouse gas emissions for all facilities producing 25,000 tonnes or more of greenhouse gas emissions in a year, in the first instance, from 2019 to 2023. Funds will be set aside to enhance support for companies to improve energy efficiency. Eligible HDB households will receive an increase in annual GST Voucher – U-Save of $20 from 2019 to 2021, to help them with the transition.
A Caring and Cohesive Society
10Over the past few years, we have been building together as a community and a society. Budget 2018 builds on the SG Cares movement in three key ways: first, by providing more support for individuals and families to prepare for the future and care for each other; second, by strengthening partnerships between the Government and the community to care for seniors and those in need; and third, by encouraging a spirit of giving in Singaporeans to build a society of caring people.
11Students will see: an increase in the annual Edusave contributions by the Government, updates to the income eligibility criteria for bursaries, and greater assistance provided to those from lower-income families. More support for financial planning will be given to citizens. Resale flat applicants can enjoy an enhanced Proximity Housing Grant. Households, particularly the lower income, will get assistance with their expenses with an extension to the S&CC rebate. The foreign domestic worker levy framework will be adjusted, while concessionary levy rates will remain for families with care needs.
12The Community Networks for Seniors will be expanded nationwide, reaching out to more seniors. For improved integration, health and social-related services for seniors will be consolidated under the Ministry of Health. Furthermore, the Government will top up the Community Silver Trust and the Seniors’ Mobility and Enabling Fund. In parallel, to encourage a spirit of giving, tax deductions for donations to Institutions of a Public Character will be extended, and support to Community Development Councils will be increased.
A Fiscally Sustainable and Secure Future
13The Government is on a sound fiscal position for the rest of this decade. As our needs as a society grow, expenditure is expected to increase in areas such as healthcare, infrastructure, security, and education. There is a need therefore to strengthen our fiscal footing, and manage expenditure growth carefully.
14In order to strengthen our revenues, the GST rate will be raised by two percentage points, from 7% to 9%, sometime in the period from 2021 to 2025. To enhance progressivity in the tax system, the top marginal Buyer’s Stamp Duty rate will be raised from 3% to 4%, applied on the value of residential property in excess of $1 million. GST on imported services will be introduced from 1 Jan 2020.
15For FY2017, a budget surplus is expected. Part of this surplus will be channelled for future spending, and there will be a one-off SG Bonus for all Singaporeans aged 21 years and above in 2018.
16Looking ahead, Budget 2018 anchors and strengthens our foundation for Singapore’s development into the next decade. We are confident this strategic financial plan will position Singapore well for the future, and support our aspirations as one people and one nation.
17More details of the measures introduced in Budget 2018 can be found on the Singapore Budget website, at www.singaporebudget.gov.sg.