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Budget 2019 Wishlist: Merdeka Generation Package, healthcare, tax reliefs
By Francis Kan
Singapore’s population is greying faster than most of the world, according to the United Nations. The country also faces rising rates of chronic illnesses, including diabetes, which, according to the Ministry of Health, affects close to one in nine people here.
These dynamics not only put pressure on the country’s healthcare system, but have deep implications for its coffers, impacting how much income tax can be collected, as well as the amount allocated to healthcare. Not surprising, then, that healthcare is expected to feature high on this year’s budget, say economists and consultants.
On their wishlist for Budget 2019, economists and consultants are expecting tax reliefs for households and individuals for medical insurance and caregiving costs, and moves to sweeten the childbearing deal. But alongside the carrots, consultants also expect some sticks – moves that will tackle health concerns like diabetes.
Here are some of the changes they expect or hope to hear on Monday when Finance Minister Heng Swee Keat will present the Budget in Parliament at 3.30pm.
For the individuals: health and wellness
Assistance package for “Merdeka” Generation
This particular Budget wish appears to be a sure-thing with the government having announced last year that some 500,000 Singaporeans born in the 50s in Singapore – the so called Merdeka Generation – will received a host of Budget goodies this year, similar to what the Pioneer generation (Singaporeans born before 1949) enjoyed in 2014. The Merdeka Generation Package will cover subsidies for outpatient care, Medisave top-ups, MediShield Life premium subsidies and payouts for long-term care, the government has said.
Tax relief for medical and health insurance
Introducing a standalone tax relief for premiums paid on medical or health insurance policies could encourage Singaporeans to take up additional health coverage for themselves and their families, to help with healthcare costs, say tax consultants.
Specifically, EY Singapore proposes allowing a tax deduction that is not tied to CPF contributions, subject to a cap of around S$5,000, for premiums paid for such policies. Tax relief for costs incurred by those over 50 years old for health screenings every other year could also be considered to encourage preventive care, EY adds.
Fitness Tax Credit
Because prevention is better than cure, PwC Singapore is proposing a Fitness Tax Credit system that rewards Singaporeans who participate in community wellness programmes, and who exercise routinely.
Digital devices such as smart watches can be used to track a person’s level of physical activity. The initiative can also be tied to the ActiveSG app, which allows users to discover and sign up for facilities, activities and programmes across the nation. Beyond tax credits, the government could also consider other incentives, such as NTUC vouchers, says PwC.
Tax deductions for caregiver expenses
Raising a child in Singapore is an expensive affair, which often means both parents work full-time, with their children being looked after by a live-in maid or in child care centres. Ageing family members, or those with special needs, meanwhile, may require nursing aides and specialised caregivers.
PwC recommends tax deductions for caregiver expenses to help defray the costs of caring for the very young and very old. EY proposes that a tax deduction of up to S$10,000 be granted to taxpayers who incur costs of hiring specialised help. Meanwhile, Deloitte Singapore suggests that child care tax relief be introduced for both working parents.
Support for new mothers to continue working
While more employers are creating child-care facilities to encourage mothers to return to work, many new mothers choose not to – or take extended leaves of absence to care for their newborns. PwC believes that funding or tax relief to help families defray the cost of infant care could encourage new mothers to return to the workforce after their maternity leave.
More “sin” taxes
The number of Singapore residents with diabetes is projected to reach one million by 2050 if nothing is done to curb the rising trend, the Ministry of Health said in December last year.
A public consultation by the Ministry on measures that would encourage the manufacturers of sweetened drinks to lower the sugar content in their products indicates that a sugar tax might be on the way. Consultants support the move, with Deloitte suggesting that the additional tax revenue be used to subsidise healthcare costs and support healthier lifestyles. Also anticipated is a rise in alcohol tax. It was last raised five years ago.
