Mention the word Budget, and most Singaporeans would probably only want to know one thing: What’s in it for me and my family? But Singapore’s annual February Budget is much more than just goodies and giveaways.
The national Budget comprises the revised government revenue and expenditure projections for the current financial year, as well as the planned government revenue and expenditure for the new financial year. In planning for both dimensions, the Budget serves as an updated annual strategic plan to ensure that Singapore’s current and future needs are addressed – all while remaining fiscally sustainable.
Here are five interesting facts you probably never knew about Singapore’s Budget.
1. Singapore’s financial year didn’t always start on April 1.
This may sound like a bad April Fool’s joke, but no Budget statement was presented in Parliament in 1969. What happened?
Before 1969, the government’s Financial Year (FY) used to follow the calendar year. Sounds pretty straightforward. However, it was announced in December 1968 that the FY would be adjusted from January-December to April-March. In the transition, FY1969 lasted 15 months (from January 1969 to March 1970) and there was no Budget statement in 1969.
Then Finance Minister Dr Goh Keng Swee explained that the move gave the government enough time to take into account economic data from the preceding year when preparing the next Budget. This is why Singapore’s FY now begins on April 1 of every calendar year, ending on March 31 the following year.
2. Deficit spending? Sorry, never heard of it.
We all know that you shouldn’t spend more than you earn. In other words, it’s financially prudent to ensure you earn enough for what you spend, so that your finances are sustainable.
The Singapore Budget relies on this timeless maxim, just on a larger scale. The government does not borrow to fund recurrent spending, nor does it tap on the past reserves for that. In fact, the government is required to maintain a balanced Budget over each term under Singapore’s Constitution
The discipline of maintaining a balanced Budget over each term of government enables public funds to be allocated sustainably.
3. Feedback is welcome. Even at a hawker centre.
This may sound too Singaporean to be true, but you can provide views and suggestions for the Budget at the most local of eating establishments: The hawker centre.
The Ministry of Finance gathers feedback on the Budget every year before it is presented. There are various channels for the public to do this, such as through the Budget website and several platforms managed by REACH, the government feedback agency. Individuals, households and businesses are invited each year to provide views and ideas on Budget-related topics.
The feedback exercise for Budget 2019 began on Dec 3, 2018 and concluded on Jan 11, 2019.
During this period, REACH held six Listening Points across Singapore to gather views and suggestions for Budget 2019, including schools, shopping malls and the Market Street Interim Hawker Centre. Did you participate?
4. Spend, spend, spend? Not quite.
While much of the public attention on the Budget focuses on expenditure – and what goodies citizens can expect – the revenue side of the equation is equally important. There can be many plans, programmes, and schemes in place. But where’s the money coming from?
For a start, Singaporeans do benefit from the national reserves. Did you know that the investment returns from the reserves form the biggest contributor to government revenue? The government is able to take in money from the investment returns generated by our reserves to supplement the annual Budget, in keeping with the provisions in the Constitution.
Based on FY2018 estimates, the top revenue contributors are:
At 17.9 per cent, the investment returns contribution from reserves – also known as Net Investment Returns Contribution (NIRC) – is the largest contributor to the Budget. The NIRC is expected to hit an estimated S$15.8 billion in FY2018.
Another key revenue source for the government is income tax. Singapore’s personal income tax rates for resident taxpayers are progressive. This means higher income earners are subject to proportionately higher tax rates, with the top income earners paying the top marginal personal income tax rate at 22 per cent. Meanwhile, did you know that about half of the workforce does not need to pay income tax?
5. There are more steps to the budget cycle than you think.
After the government has approved the Budget, the Minister for Finance presents it to Parliament, typically in February. Parliament reconvenes the following week for the Budget Debate, where Members of Parliament debate various aspects of the Budget.
The Budget Debate concludes with the Minister for Finance delivering a Round Up Speech addressing the issues raised by the MPs and summing up the key themes and thrusts of the Budget.
Parliament then sits as the Committee of Supply to explore each ministry’s plans in greater detail. After the Committee of Supply has voted on all ministries’ estimates, it reports its decision to Parliament, which will debate and vote on the Supply Bill.
That’s not all. The Supply Bill is subsequently sent to the President for assent. She can withhold her assent if she believes that the estimated expenditure may draw on past reserves. If the President assents to the Supply Bill, the Bill is then enacted into a law called the Supply Act. This Act controls the government’s spending in the coming financial year.
Visit the Budget 2019 website to find out more about the Singapore Budget.