Singapore Finance Minister Heng Swee Keat unveiled on Monday (19 February) the proposed Budget for the fiscal year starting 1 April 2018.
As many economists expected, the government announced plans to increase the goods and services tax (GST) to 9 per cent from 7 per cent, but the timing will be “sometime” from 2021 to 2025. However, Heng said it would likely be implemented sooner rather than later.
Also, GST on imported services – not goods – will be introduced with effect from the beginning of 2020.
Many economists had expected a hike in the goods and services tax (GST) by one percentage point to 8 per cent this year and by another percentage point to 9 per cent next year. The GST was last raised to 7 per cent in 2007.
Here are the highlights of the speech:
— Singapore expects an overall budget surplus of S$9.6 billion or 2.1 percent of GDP in the 2017/18 fiscal year, larger than the forecast made a year earlier for a surplus of S$1.9 billion or 0.4 percent of GDP.
— For the 2018/19 fiscal year, an overall budget deficit is expected at S$0.6 billion, or 0.1 percent of GDP.
— Singapore’s good and services and taxes (GST) will be increased by 2 percentage points, from 7 percent to 9 percent sometime from 2021 to 2025. Heng said that it is likely to be implemented earlier rather than later in that period.
— Singapore introduced a new GST on business-to-business and business-to-consumers imported services which will not affect e-commerce for goods. The GST does not apply if an overseas supplier does not have an establishment here. More detail will be released by the end of this month.
— Singapore will raise its corporate income tax rebate to 40 percent of tax payable, capped at S$15,000 ($11,441). It will extend the corporate tax rebate to 2019, at a rate of 20 percent of tax payable, capped at S$10,000.
— Singapore will increase excise duty on all tobacco products by 10 percent, effective Monday.
PROPERTY STAMP DUTY
— Singapore will raise the top marginal buyer’s stamp duty for residential properties from 3 percent to 4 percent. The change will apply to all residential properties acquired from tomorrow (Tuesday).
— Carbon tax, which will be implemented in 2019, will stand at S$5 per tonne of greenhouse gas emissions from 2019 to 2023. It will be reviewed by 2023, and is planned to be increased to S$10-S$15 per tonne by 2030. Singapore expects to collect S$1 billion from the carbon tax in the first five years.
FOREIGN WORKER LEVY
— Singapore will defer earlier announced increases in foreign worker levy rates for another year for marine shipyard and process sectors.
— Singapore increased its infrastructure spending from S$8.5 billion in 2011 to an estimated S$20.0 billion in 2018.
— Similar to the Changi Airport Development Fund in 2015, Singapore will set up a new Rail Infrastructure Fund to save up for major rail lines, which starts with an injection of S$5 billion in fiscal 2018.
“HONG BAO” FOR CITIZENS
— All Singaporean citizens will receive a “one-off” bonus in 2018 which will cost the city-state S$700 million. All Singaporeans aged 21 and above will enjoy up to S$300, depending on their income. The minister called the bonus a “Hong Bao” (red packet), which is a monetary gift during the Lunar New Year.
– with report from Reuters