|DPM and Finance Minister Tharman Shanmugaratnam|
In his nearly 2-hour speech, he talked about plans to make the tax system more progressive and further increase subsidies for lower-income and elderly workers in order to help improve social mobility. He also disclosed measures to mitigate the tightening of foreign labour and to improve productivity.
- Personal income tax rebate – Government will extend a rebate of 30% subject to a cap of $1,500 to those below 60. Those aged 60 or above will receive a rebate of 50%.
- Government will provide an extra GST voucher on top of the permanent GST voucher for this year to help cope with cost of living.
- Health subsidies – Medifund will be increased by $1 billion to $4 billion and Eldercare to go up by a quarter million to $3 billion. Government will expand senior mobility fund to cover a much wider range of devices such as hearing aids.
- Cars with an open market value of above $50,000 will have an ARF of 180 per cent. Currently, for cars registered with COEs obtained from Mar 2008 tender exercises and onwards, ARF is 100% of OMV.
- More progressive property tax – Band for zero property tax will be widened. Property tax for high-end investment residential properties will be raised.
- Changes to CPF – Employer contribution rate will be restored fully
- Enhancements to Workfare scheme – WIS payments will be raised. Workers will receive 40% of WIS in cash as compared to 29%. Workfare will now cover workers earning up to $1,900 from $1,700 ceiling. This will benefit 480,000 workers or 30 per cent of the workforce.
- Increase in Opportunity Fund for students from less advantaged backgrounds – additional $72 million infusion. It is extended to polytechnics also.
- $300 million top-up to Edusave fund
- Spending in pre-school sector to double to $3 billion over next 5 years. More pre-schools to be set up.
- Tobacco excise duties to be raised.
- EDB will set aside $500 million for next five years to develop new frontiers in manufacturing.
- Government will introduce a land productivity grant, which will be provided to companies that intensify land use or relocate some operations to immediate region.
- Productivity incentives will be provided to further boost training. Government will also launch an SME talent programme.
- On road tax, commercial vehicles will get a 30 per cent rebate.
- Wage Credit Scheme for 3 years – The government will co-fund 40 per cent of wage increases to Singaporeans with gross monthly wage up to S$4,000. WCS payouts will be paid out to employers automatically and annually over three years. No application needed. The scheme will cost government $3.6 billion over 3 years.
- Foreign Workers -
- MOM will continue to tighten eligibility for Q1 pass holders.
- Minimum S Pass qualifying monthly salary will be increased from $2k to $2.2k from 1 July 2013.
- Dependency ratio ceilings will be cut. DRC in services will be cut from 45 per cent to 40 per cent.
- In construction, levy rates for less skilled Work Permit Holders in Construction Sector will increase by $150 between Jul 2013 and Jul 2015
- All foreign worker levies will be increased 2014 and 2015.
- Government will invest 30 per cent more in sports programmes over the next five years. The government will also create a fund to match investments for cultural programmes.
DPM Tharman talked extensively on the need to raise productivity. He said, “If we do not do better in raising productivity… businesses and workers will be worse off. We must help SMEs revitalize themselves.”
He said the government can and will actively support all SMEs that are willing to upgrade. The restructuring of our economy must result in a dynamic and re-engergised SME sector, he said.
He says dependency ratio ceiling cuts will be made in sectors which are behind global productivity leaders. Levies will also be increased on industries most dependent on foreign workers.
He noted that in construction and retail, Singapore’s productivity is one-fifth below HK’s.
“We will not increase levies for skilled workers. Most companies will not need to pay higher levies if they rely on skilled workers,” he said.
DPM Tharman also talked about the need to address income inequality. He notes that older Singaporeans make up 40 per cent of Singapore workers in the lower income ladder.
He said that society is facing widening income disparity. “We must take further steps to temper inequality,” he said.
More must be done to help seniors enter their retirement, he added.
He also revealed that Singapore has a huge budget surplus for fiscal year 2012, “We expected $1.3 billion but we now expect the higher surplus of $3.9 billion due to higher revenues from stamp duties.”
Also, for fiscal year 2013, he projected that government would post another surplus of $2.4 billion equivalent to 0.7 per cent of GDP. Singapore’s economic growth will likely range between 1 per cent to 3 per cent this year.
Source: TRE website