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Budget 2018: Key announcements and highlights

Finance Minister Heng Swee Keat announced a raft of immediate and impending tax changes in this year's Budget, which he described as a “strategic and integrated plan” to position Singapore for the future. Here are the highlights and key announcements he made in Parliament on Monday (Feb 19):

Minister for Finance Heng Swee Keat arriving at Parliament House on Monday (Feb 19) for Budget 2018. Photo: Jason Quah/TODAY

Minister for Finance Heng Swee Keat arriving at Parliament House on Monday (Feb 19) for Budget 2018. Photo: Jason Quah/TODAY

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Finance Minister Heng Swee Keat announced a raft of immediate and impending tax changes in this year's Budget, which he described as a “strategic and integrated plan” to position Singapore for the future. Here are the highlights and key announcements he made in Parliament on Monday (Feb 19):

Every Singaporean aged 21 years and above this year will receive a one-off "hongbao" of between S$100 and S$300 from the Government, as the Republic expects a record surplus for the current financial year.

* Mr Heng also announced two additional tax changes by the Government:

- To raise buyer's stamp duty for residential properties above S$1 million from 3 per cent to 4 per cent. The revised rates will apply to all residential properties acquired on or after Feb 20. Read the full announcement here.

- To impose a 10% increase on excise duty across all tobacco products with effect from Feb 19.

* Businesses providing digital services, such as the streaming of entertainment content, will have to pay the Goods and Services Tax (GST) from Jan 1, 2020.

The Goods and Services Tax (GST) will be raised by 2 percentage points to 9 per cent sometime between 2021 and 2025, said Mr Heng. The exact timing of the hike - which has been widely anticipated in recent weeks in the lead-up to Budget 2018 - depends on “the state of the economy, how much our expenditures grow, and how buoyant our existing taxes are”, added Mr Heng. “But I expect that we will need to do so earlier rather than later in the period.”

* To meet major infrastructure needs, the Government will set up a new Rail Infrastructure Fund to save up for major rail lines, while looking at borrowing by Statutory Boards and Government-owned companies which build infrastructure, said Mr Heng. He added that a S$5 billion injection will be made into the rail fund in Financial Year 2018, and this can be topped up in future when “our fiscal position allows”.

* Singapore is on a sound fiscal footing for 2011 to 2020. "But in the next decade, between 2021 to 2030, if we do not take measures early, we will not have enough revenue to meet our growing needs," Mr Heng said citing the country's growing expenditures in areas like healthcare and infrastructure. For instance, the average annual Government healthcare subsidies for an elderly Singaporean is more than six times that of a younger person, or about S$4,500 more.

By 2020, Mr Heng pointed out, the total number of elderly in Singapore will increase by about 450,000, to 900,000. 

* To ensure demand for foreign domestic workers (FDWs) is commensurate with need and avoid overreliance on maids, the Government will be increasing the FDW levy for a small group of employers who do not qualify for concessionary rates, or who employ multiple FDWs, from April next year.

Announcing this, Mr Heng said the levy rate for the first FDW employed without levy concession will be raised from the current S$265 to S$300. For the second FDW employed without levy concession, the rate will be increased to S$450. The concessionary levy rate of S$60 per month remains unchanged.

Here's an FAQ on the changes on the Ministry of Manpower's website.

* The Proximity Housing Grant, which provides support for family members to live with or near each other, will be enhanced, Mr Heng said, with singles now being eligible for the scheme if they buy a resale flat near their parents.

* The second half of Budget 2018 has resumed after a short break. Mr Heng is now addressing how Singapore can build a caring and cohesive society.

Large carbon emitters will be taxed S$5 for each tonne of greenhouse gases generated from next year to 2023 – a significantly lower rate than the S$10 to S$20 per tonne envisioned last year by the authorities.

The carbon tax – first announced in last year's Budget – will be increased to S$10 to S$15 by 2030. The increase will take place after reviews that take into account international climate change developments, the progress of efforts in mitigating emissions and Singapore's economic competitiveness, Mr Heng said on Monday.

* "A strong economy is not an end in itself. It is a means to build a better home and provide a better quality of life for all our people," Mr Heng said as he began outlining plans to make Singapore a "smart, green and liveable city". 

* "Though our economy picked up last year, some firms remain concerned about business costs," Mr Heng acknowledged. To that end, the Government will extend the wage credit scheme, and enhance and extend the corporate income tax rebate, among other measures, in its bid to help firms cope with near-term cost pressures.

*Singapore must prepare for three major shifts in the coming decade - the shift in global economic weight towards Asia, the emergence of new technologies, and ageing, says Mr Heng.

* "Riding on the global upturn, Singapore's economy picked up last year," Mr Heng said in his opening remarks. Singapore's GDP grew by 3.6 per cent, up from 2.4 per cent in 2016. 

Singapore's productivity growth notched the highest growth figures since 2010. Real median income for Singapore citizens rose by 5.3 per cent last year.


LIVE: Finance Minister Heng Swee Keat delivers this year's Budget statement (2/2)

Finance Minister Heng Swee Keat delivers this year's Budget statement (1/2)

 

 

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