Budget 2016: Winners and losers

It appears there were many more winners than losers in the Budget outlined by Singapore Finance Minister Heng Swee Keat on Thursday. A business-focused Budget, it nevertheless spread around some "goodies" for a broad base of Singaporeans in line with its aim to build a "caring and resilient" society.

Here's a look at who "won" and who "lost" in Budget 2016.

Winners:

Some 1.4 million Singaporeans: To support households amid current economic conditions, Heng announced that the government will provide a one-off GST voucher cash special payment of up to $200 for eligible GST voucher cash recipients. The special payment is expected to cost an additional $280 million in 2016 and benefit some 1.4 million Singaporeans.

SMEs: The existing corporate income tax rebate will be raised to 50 per cent of tax payable from 30 per cent, with a cap of $20,000 rebate each year for the years of assessment (YAs) 2016 and 2017. It is estimated that the increased support will cost an additional $180 million over two years. Heng pointed out that the higher percentage rebate is targeted at SMEs.

Heng will also expand the SME mezzanine growth fund to $150 million from $100 million. He will also introduce an SME Working Capital Loan Scheme for loans of up to $300,000 per SME. The government will co-share 50 per cent of the default risk of such loans.

Couples having children: Government will introduce a new Child Development Account (CDA) first step grant for all Singaporean children. Parents of children born from 24 March this year will automatically receive $3,000 in their child’s CDA, which they can use for their children’s healthcare and childcare needs. Parents who save more will continue to receive dollar for dollar matching from the government up to the co-savings cap.

Heng also announced that the MediSave withdrawal limit for pre-delivery medical expenses would be doubled to $900 from $450 with immediate effect.

Some parents with young children: Heng announced a new pilot initiative called KidSTART aimed at helping children up to six years-old receive appropriate learning development and health support. It is expected to cost $20 million and help about 1,000 children.

Also, a grant of up to $35,000 will be given to families with children in rental housing to help such families own a two-room flat with a shorter lease as long as they stay employed and make sure their children attend school.

Older workers and firms employing them: Heng will modify and extend the Special Employment Credit (SEC) for three years to the end of 2019 to provide employers with a wage offset for workers aged 55 and above earning up to $4,000 a month. About 340,000 workers are expected to benefit from the move, which will be funded by a $1.1 billion top-up of the SEC Fund.

Low-income workers: Government will improve the Workfare Income Supplement (WIS) for work done from January next year. The qualifying income will be raised to $2,000 a month from $1,900. It is expected to benefit 460,000 Singaporeans. WIS payouts will also increase depending on a worker’s age and income. For example, workers earning $1,000 to $1,600 a month will receive increases in payouts of $100 to $500, Heng said.

Professionals, managers, executives and technicians (PMETs) who want to learn: Under the “Adapt and Grow” initiative, the Ministry of Manpower will enhance employment support, commiting an additional $35 million from the Lifelong Learning Endowment Fund and Skills Development Fund.

Disabled low-income workers who want to learn: Persons with disabilities who earn low wages and are under 35-year-old will be eligible for the Workfare Training Support scheme.

The elderly: Silver Support-eligible seniors will receive between $300 and $750 every quarter, depending on flat type. Government will also increase the Singapore allowance and monthly pension ceiling by $20 per month each to $300 and $1,230, respectively. This is expected to benefit about 10,000 pensioners.

Some households relying on public assistance: The basic monthly cash allowance on public assistance for a two-person household both on public assistance will receive an additional $80 a month

HDB households: One to three months of service and conservancy charges rebates will be given, with 1 and 2-room HDB households receiving a total of three months rebates for this year. This will cost the government $86 million and benefit about 840,000 HDB households, said Heng.

Firms specializing in public works projects: Total spending, including public infrastructure projects, is expected to be $5 billion (7.3 per cent) higher than fiscal year 2015. The increases are mainly in healthcare, education, security and urban development. Heng also unveiled plans for the Jurong Innovation District, an “industrial park of the future”. The first phase is targeted for completion around 2022. To support the development of the Changi Airport Terminal 5, a further $1 billion top-up will be made to the Changi Airport Development Fund. Plus, government will build a new outward-bound Singapore campus on Coney Island that is expected to be ready around 2020 and cost about $250 million.

Heartland shops: The Ministry of National Development will enhance the revitalization of shops package to support promotional activities and upgrading projects in HDP town and neighbourhood centres. It is expected to cost about $15 million annually.

Companies that automate: According to Heng, the government will provide a grant to support the rollout or scaling up of automation projects. Up to 50 per cent of project cost will be funded at a maximum grant of $1 million. Also, for qualifying projects, there will be a new $100 investment allowance for automation equipment. To improve SMEs access to loans, government’s risk-share with participating financial institutions will be raised to 70 per cent from 50 per cent. Heng anticipates the automation support package will provide support of over $400 million over the next three years.

Companies that consolidate, acquire: Heng will grant the mergers and acquisitions (M&A) allowance on up to $40 million of the value of the deal instead of the current cap of $20 million.

Companies that dispose equity investments: Heng will extend the non-taxation of companies’ gains on disposal of their equity investments.

Companies involved in robotics: Over $450 million will be made available to support the National Robotics Programme over the next three years, said Heng.

Trade associations and chambers: To help TACs strengthen their outreach, government will build the existing Local Enterprise and Association Development (LEAD) Programme through the new LEAD-Plus programme. The government will also set aside up to $30 million over the next five years to support TACs in developing their capabilities.

Researchers, scientists, companies investing in R&D: To support the Research, Innovation and Enterprise (RIE) plan, up to $4 billion will be directed to industry-research collaboration. A top-up of $1.5 billion will also be provided to the National Research Fund this year.

As a whole, Heng said he was setting aside a total of $4.5 billion under the industry transformation programme to support enterprises and industries, on top of the amounts for R&D and the national productivity fund.

Companies that encourage employees to help charities: Heng said he would introduce a pilot business and Institutions of a Public Character (IPC) scheme. From 1 July this year to the end of 2018, businesses that organise their employees to volunteer and provide services to IPCs will receive a 250 per cent tax deduction on associated cost incurred subject to the receiving IPC’s agreement. The deduction will be subject to a yearly cap of $250,000 per business and $50,000 per IPC.

For three years starting from April this year, government will also provide dollar-for-dollar matching for any additional donations through Community Chest’s (ComChest) SHARE programme. The government will also allow part of the matching funds to be used by businesses to organize corporate social responsibility activities.

Also, a new fund called Our Singapore will be set up to “support projects that build the spirit of caring and resilience, nurture our can-do spirit and promote unity and our sense of being Singaporean”. The total fund size will be up to $25 million and will be set up by the second half of 2016.

Losers:

Most companies employing work permit and S-pass holders: Government will proceed with levy increases for services and construction work permit holders, as well as S pass holders in every sector as announced in last year’s budget, said Heng. Only the levies for workers in the marine and process sectors will be deferred for a year.

Companies that rely on the Productivity and Innovation Credit (PIC) Scheme: The cash payout rate under the scheme will be lowered to 40 per cent from 60 per cent for expenditures incurrent on or after 1 August this year.

The 1 per cent: Heng will cap the total amount of personal income tax relief an individual can claim at $80,000 per year of assessment. At that threshold, 99 per cent of tax resident individuals will not be affected, he said. It will take effect from year of assessment 2018 and is expected to raise an additional $100 million a year.