Finance Minister Heng Swee Keat unveiled the Budget for fiscal year starting April 2019 in Parliament at 3.30 pm on Monday (18 February).
The Budget speech was his first since he was picked as first assistant secretary-general of the ruling People’s Action Party last November.
The following are some highlights of Singapore’s budget proposals for Budget 2019.
The budget plan comes days after data showed Singapore’s economy grew at its slowest pace in more than two years in the fourth quarter, and its trade ministry warned that manufacturing is likely to face significant moderation this year.
–For fiscal 2018 Singapore expects an overall budget surplus of S$2.1 billion or 0.4 per cent of GDP. This is a $2.7 billion increase from the $0.6 billion deficit forecasted a year ago on the unexpected 2-year suspension of the Kuala Lumpur-Singapore High-Speed Rail project and the higher-than-expected Stamp Duty collections.
–For fiscal 2019, the budget position remains expansionary. An overall deficit of $3.5 billion, or 0.7 per cent of GDP, is expected.
PRODUCTIVITY AND MANPOWER
— Automation support package will be extended by two years.
— To reduce quota for foreign workers in the services sector in coming years.
The foreign worker dependency ratio ceiling (DRC), or the maximum proportion of foreign workers in a company, will be lowered to 38 per cent on 1 January, 2020 and to 35 per cent on 1 January, 2021, from 40 per cent now. The service sector S Pass sub-DRC will be similarly lowered from the current 15 per cent to 13 per cent, and then to 10 per cent.
— Firms can continue to apply for additional manpower in some cases. On a case-by-case basis, firms can bring in foreign workers with specialised skills that are in demand globally.
— Expect to spend S$4.6 billion over the next three years on new and enhanced economic capability-building measures, with S$3.6 billion going towards helping workers “thrive amid industry and technological disruptions” and $1 billion to help firms build capabilities.
— To set aside S$6.1 billion ($4.5 billion) Merdeka Generation Fund to support elderly Singaporeans, including help to save for their healthcare needs. The Merderka Generation Package to benefit close to 500,000 Singaporeans born in the 1950s.
Those in the Merdeka Generation will receive a $200 Medisave top-up every year until 2023. They will also get higher subsidies under the Community Health Assist Scheme (Chas) and an extra 25 per cent discount on their bills at polyclinics sand specialist out patient clinics.
They will also get between 5 and 1`0 per cent off their MediShield Life premiums, as well as an extra “participation incentive” of $1,500 if they choose to join the national disability insurance scheme CareShield Life.
The government will also give a one-off $100 top-up to their PAssion Silver concession cards.
The government will provide a special MediSave top-up of $100 per year for the next 5 years for Singaporeans aged 50 and above in 2019 who are not eligible for the MGP or the Pioneer Generation Package (PGP).
— To introduce S$1.1 billion ‘Bicentennial Bonus’
As part of the bonus, 1.4 million lower-income Singaporeans will receive up to $300 through a GST Voucher cash payout. The payment, which will be received at the end of this year, is meant to help them with their daily living expenses.
For all tax resident individuals, a 50 per cent personal income tax rebate capped at S$200 will be granted for the year of assessment 2019. The rebate is estimated to cost about $280 million.
Lower-income workers who received Workfare Income Supplement (WIS) payments will also get a Workfare Bicentennial Bonus. They will receive an additional 10 per cent of their WIS payment for work done in 2018, with a minimum payment of $100, in cash.
There will be a one-off $150 top-up to the Edusave accounts of Singaporean students aged seven to 16. Singaporeans aged between 17 and 20 will receive $500 in their Post Secondary Education accounts (PSEA).
Singaporeans aged 50 to 64 in 2019 and who have less than $60,000 of retirement savings in their CPF accounts will receive a top-up of up to $1,000. This will be credited into the Special Savings Account for members aged 50 to 54 and Retirement account for members aged 55 to 64.
–To introduce a $200 million Bicentennial Community Fund $200 million to encourage Singaporeans to give back.
The fund will provide dollar-to-dollar matching for donations garnered by Institutions of a Public Charter (IPCs) in 2019.
Donations to Institutions of a Public Character (IPCs) qualify for a 250 per cent tax deduction. Businesses also enjoy a 250 per cent tax deduction on qualifying expenditure when their employees volunteer or provide services to IPCs, under the Business and IPC Partnership Scheme.
— To provide greater healthcare assurance, the government will extend the Community Health Assist Scheme (CHAS), to cover all Singaporeans for chronic conditions, and enhance subsidies for existing CHAS cardholders.
The government will set aside another $3.1 billion towards the long-term care of Singaporeans in the form of premium subsidies and other types of support. This is on top of $2 billion that was earmarked last year. The government will put the $5.1 billion into a new Long-Term Care Support Fund, to fund CareShield Life subsidies and other support measures, such as ElderFund.
–Starting Tuesday, 19 February, returning travellers will have a smaller allowance of tax-exempt shopping.
Those who spend fewer than 48 hours outside Singapore will have to pay the 7 per cent goods and services tax (GST) on items bought abroad worth $100 and more, down from $150. The threshold will be lowered to $500 from $600 for those who spend 48 hours or more outside the country.
The alcohol duty-free concessions for travellers will be cut to two litres from three litres starting 1 April.
–Starting immediately, the excise duty for diesel will be raised by $0.10 per litre to $0.20 per litre.
The government will also permanently reduce the annual special tax on diesel taxis by $850, and on diesel cars by $100. The government will also provide a 100 per cent road tax rebate for one year, and partial road tax rebate for another two years for commercial diesel vehicles.
Additional cash rebates of up to $3,200 will be given for diesel buses ferrying school children.
– with reporting from Reuters