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Singapore budget 2018-Key Highlights and Announcement

Singapore Budget 2018 has raised goods & services tax for the first time in a decade from 7% to 9%. The Finance Minister Heng Swee Keat said it was the best option to cope up with increasing costs of health care of aging Singapore. He speculated that the expenses would double over the next decade.

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Singapore budget 2018-Key Highlights and Announcement

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  1. Singapore Budget 2018 Some Goodies for Everyone (PPT)

  2. It offers‘Some Goodies for Everyone.’ Finance Minister Heng Swee Keat presented Singapore Budget 2018 to the Parliament on February 19.

  3. Mr. Heng said, “It is a wide-ranging Budget to competently address Singapore's long-term challenges. It is more of a multi-year agenda for the country.” He announced taxing of property, consumption, & online services.

  4. “It is time act prudently as the Singaporean economy is maturing but the population is aging.” He reminded Singaporeans to plan for healthcare expenses.

  5. The key priority for Singapore is to provide healthcare for the aging population. The expenses have almost doubled to S$10.2 billion in 2018. Over the next decade, it is expected to rise 3 percent of GDP.

  6. The Budget 2018 is an intimation that Singaporeans will need to find more revenue for healthcare, infrastructure, transport, special transfers, & defense. The GST is hiked by 2% scheduled for some time from 2021 to 2025. The excise duty on Tobacco is increased by 10%, effective from Feb 19.

  7. Major Fund Allocations in Singapore Budget 2018 The overall expense on the infrastructure is expected to rise to S$20 billion in 2018.

  8. There are initial casualties of the budget 2018. The top marginal Buyer's Stamp Duty for residential properties is hiked from 3% to 4% starting on Feb 20, 2018. The portion of the value of residential property in excess of $1 million will be taxed.

  9. Singapore has substantial reserves that it draws on to help finance the budget. The interest earned on the reserves (S$16 billion) is the biggest contributor to the government’s revenues. Mr. Heng is not in favor of such practice. It is not a long-term solution. He wants it for emergencies rather than daily spending.

  10. Mr. Heng said, “The government explored all possible alternatives to increase in GST rate. However, each option carried pluses and minuses.” The increase in corporate tax, when other countries are reducing it, could have sent a negative message to the business owners.

  11. The budget announced that digital imported services would be taxed with GST from Jan 1, 2020. It also covers marketing, accounting, IT and management services. It covers Netflix and Spotify, apps, listing fees on electronic marketplaces, software, and online subscription fees from overseas suppliers but not e-commerce for goods.

  12. Mr. Heng has announced one-time payout from the budget surplus. Depending on their income, the 2.7 million Singaporeans will receive S$100, S$200 or S$300 in end-2018. The amount is big enough to kick the consumption a little bit.

  13. The budget also announced that the permanent GST voucher scheme would be topped up by $2 billion as opposed to last year’s $800 million. It has more than doubled the allocation. It will help households with lower-income to cope up with the changes in GST. The budget promises to absorb GST on publicly subsidized education & healthcare as before.

  14. There is an increase in the foreign domestic worker levy. It will increase from $265 to $300 for the first foreign domestic worker and from $265 to $450 for the second worker. It is for those employed without levy concession.

  15. For employers who do not qualify for concessions, the levy will be raised to $300 per month for the first worker and to $450 for the second helper. The households with children below 16, seniors, or disabled persons will continue to get the concession of $60.

  16. The budgetary measures also include incentivizing innovation, new Productivity Solutions Grant, initiatives to meet climate change commitments, enhancements to the Proximity Housing Grant, the tax deduction for commercial use of intellectual property, an extension of Wage Credit Scheme.

  17. Mr. Heng said, “The implementation of the GST hike will depend on the state of the economy, increase in expenditure, and how buoyant existing taxes are. It was a difficult decision.” He also cautioned that the Government would ‘need to do so earlier rather than later.’

  18. Thank You! Contact us: SBS Consulting Pte Ltd High Street Center, #17-02, 1 North Bridge Road, 179094 - Singapore Phone: +65-6536 0036 Email: info@sbsgroup.com.sg

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