When Budget time rolls around every year, it’s common for Singaporeans and businesses across the country to draw up wish lists and express hopes for more “goodies” in the form of tax breaks or subsidies.
While understandable, this focus on individual measures tends to overshadow the fact that each year’s Budget actually forms part of the government’s longer-term strategy to ensure that the country’s current and future needs are adequately addressed, while remaining fiscally sustainable.
To better understand the Budget, it should be viewed within the context of broader issues like global trends and developments, existing government measures, and the bigger fiscal picture.
In this article, we highlight a few key initiatives from recent Budgets that set the stage for Budget 2019, which will be unveiled by Minister for Finance Mr Heng Swee Keat on Feb 18.
TRANSFORMING THE ECONOMY
The global economy has become more uncertain. The ongoing global trade tensions weighs heavily on business sentiment, while technological disruption impacts businesses across a range of industries.
To address this fast-changing landscape, the Committee on the Future Economy (CFE) identified a slate of strategies focusing on areas such as supporting internationalisation, deepening skills, strengthening enterprise capabilities, and building strong digital capabilities.
One key aspect of the CFE’s plan is to develop and implement the Industry Transformation Maps (ITM), announced in Budget 2016. ITMs outline how sectors are expected to grow and transform, seize opportunities, and address challenges by bringing industry stakeholders together to drive transformation at the firm-level. A total of 23 ITMs have been launched in six clusters, covering over 80 per cent of Singapore’s economy.
The Adapt and Grow initiative – announced at Budget 2016– is also spurring workers to stay relevant. The scheme aims to assist Singaporeans affected by economic slowdown and restructuring. In 2017, it helped more than 25,000 people find jobs.
MAKING SINGAPORE A MORE INCLUSIVE SOCIETY
Recent Budgets have also focused on accelerating efforts to build an inclusive society. There were initiatives designed to give every young Singaporean a good start in life, make Singapore a great place for families, and enable seniors to age gracefully and be cared for through better services within the community.
A plan was announced in Budget 2016 to help children from disadvantaged families get a good start in life. Known as KidStart, it provides eligible children with health and learning support, such as basic immunisations and placement in pre-schools. Their parents will receive support in caring for their children through home visits, parent support groups, or reading courses at pre-schools.
Budget 2016 also saw the piloting of the Community Networks for Seniors (CNS) programme to support active ageing, and provide befriending and care to seniors. The CNS has helped many seniors, and it was announced in Budget 2018 that CNS will be expanded nationwide by 2020.
Meanwhile, Budget 2017 gave more support to Singaporeans seeking to buy their first homes in the form of increased CPF Housing Grants for first-timer families buying resale flats and first-timer singles buying resale flats. During Budget 2018, an enhanced Proximity Housing Grant was also announced to help families buying resale flats to live closer to each other.
FOSTERING A CARING SOCIETY
Another goal of recent Budgets has been to create a more caring nation by providing support to vulnerable groups and strengthening partnerships between the government and the community. One way to encourage this is to promote volunteerism and charitable projects. In Budget 2018, current tax deductions of 250 per cent for qualifying donations were extended for a further three years.
To support Singaporeans who wish to help address social and community needs, the government announced in Budget 2016 that it would set aside up to S$25 million in the Our Singapore Fund to support meaningful projects.
CREATING A FAIR AND SUSTAINABLE FISCAL SYSTEM
One common goal of all Budgets is to ensure that the government has sufficient resources to meet Singapore’s priorities for the long term. The system not only has to be fair and progressive, but also sustainable. Currently, the largest contributor to government revenue comes from net investment returns contributions from the national reserves, while the overall tax burden on Singaporean families and businesses remains low.
Yet with expenditure in priority areas such as healthcare, infrastructure and security expected to increase over time, the Goods and Services Tax (GST) is set to rise from 7 to 9 per cent sometime between 2021 and 2025. This move will provide additional revenue of almost 0.7 per cent of Singapore's gross domestic product each year.
GST on publicly subsidised education and healthcare will continue to be absorbed and the permanent GST Voucher scheme – which provides help to lower-income households and seniors – will also be enhanced when GST is increased.
To help Singaporeans adjust to the GST increase, an offset package will be implemented for a period. Lower- and middle-income households will receive more support.
SINGAPOREANS: AT THE HEART OF THE BUDGET
The various programmes unveiled in recent Budgets will enable Singaporeans to grow up in a safe and caring environment with the opportunities to realise their potential. Singapore businesses will also be better equipped to transform and become more competitive in a fast-evolving global economy.
Budget 2019 is expected to outline further steps in the continuing effort to make Singapore a better home for all.
Visit the Budget 2019 website to find out more about the Singapore Budget.
Details on government outcomes across different areas can be found in the latest Singapore Public Sector Outcomes Review.