SINGAPORE: Budget 2017 is an investment in Singapore's economic transition and social resilience, said Finance Minister Heng Swee Keat on Monday (Feb 20) as he outlined how the country can thrive in an uncertain and rapidly changing world.
Mr Heng, in his first major speech since recovering from a stroke he suffered last May, laid out a slew of measures targeted at businesses, workers, households and the environment.
Here are five key takeaways from Budget 2017:
1. WATER PRICES TO GO UP
Water prices will increase by 30 per cent in two phases over the next two years, starting from July this year. Households using more water - above 40 cubic metres a month - will be charged a higher rate of a volume-based fee, to discourage water wastage.
Mr Heng said that for 75 per cent of households, the increase in water bills will be less than S$18, once the increase is fully phased in on Jul 1, 2018. For three-quarters of businesses in Singapore, the increase will be less than S$25 a month.
To offset the increase, the Government will introduce measures to help lower- and middle-income households. For instance, there will be a permanent increase in the Utilities Save (U-Save) rebates that will benefit about 880,000 HDB households.
2. REBATES FOR PERSONAL INCOME TAX AND S&CC
There will be a Personal Income Tax rebate of 20 per cent of tax payable, capped at S$500, for income earned in 2016.
As for the service and conservancy charges (S&CC) rebate, it will be extended, and increased by 0.5 months for FY2017. This means eligible HDB households will receive 1.5 to 3.5 months of S&CC rebates this year.
3. SUBSIDIES FOR FIRST-TIMERS BUYING RESALE FLATS
Couples buying their first home from the HDB resale market will get more subsidies to do so.
The CPF Housing Grant, previously capped at S$30,000 for couples who buy four-room or smaller resale flats will be increased to S$50,000. The grant has also been raised for couples who want to buy five-room or larger resale flats.
Together with the Additional CPF Housing Grant and Proximity Housing Grant, these couples can receive up to S$110,000 in subsidies. The changes take place with immediate effect, said Mr Heng.
4. CARBON AND DIESEL TAX
From 2019, a carbon tax will be imposed on large direct emitters of greenhouse gases such as power stations, and this will help Singapore achieve its commitment to the Paris climate agreement.
Industry consultations have already started but Mr Heng said that as of now, the Government is looking at at a tax rate of between S$10 and S$20 per tonne of greenhouse gas emissions.
A carbon tax imposed on power stations could result in an increase in electricity prices of between S$1.70 and S$3.30 per month for an average household in a four-room flat.
Mr Heng also announced changes to how diesel will be taxed, effective immediately.
There is now a volume-based duty at S$0.10 per litre on automotive diesel, industry diesel and diesel components in biodiesel, instead of the previous lump-sum special tax on diesel cars and taxis, regardless of the amount of diesel used.
5. REBATES AND CREDIT TO HELP FIRMS MANAGE COST
The Government will enhance the corporate income tax (CIT) rebate. It will raise the cap from S$20,000 to S$25,000 for YA2017. The rebate will remain at 50 per cent of tax payable, after being raised from 30 per cent in last year’s Budget.
This was among the measures introduced to help companies address near-term concerns.
The Government will also provide more support for firms hiring older workers. For instance, the Additional Special Employment Credit will be extended until the end of 2019, so employers can receive wage offsets of up to 3 per cent for workers who earn under S$4,000 per month and are not covered by the new re-employment age of 67.
This extension is set to benefit about 120,000 workers and 55,000 employers.