SINGAPORE — The young, low-income and elderly will benefit from this year’s Budget measures promoting inclusiveness and social mobility, while some on the highest end of the wealth spectrum, such as owners of luxury cars and high-end residential properties, will fork out more in taxes.

This year’s Budget featured measures to ensure a sound foundation for children and a stronger safety net for seniors and those requiring medical help, but several tax initiatives were also rolled out to create a more progressive fiscal system.

The latter, observers said, show the Government taking more from the rich and sends out a signal on social equity.

In his Budget speech yesterday, Deputy Prime Minister Tharman Shanmugaratnam cited two key concerns of the Government: Income equality and the risk that it poses to social cohesion, as well as providing seniors a “greater sense of security in their retirement years”. “We have to take further steps to ameliorate inequality and give every Singaporean a real chance to do well and have a fulfilling life,” he added.

Among the fiscal measures is a more progressive residential property tax system. More homes will pay no property tax from next year — those with annual value of up to S$8,000, up from S$6,000 currently. The top 1 per cent of owner-occupied homes, numbering about 12,000, will have to pay more property tax, with rates going up sharply only for those at the “very top end”.

More significant tax increases will apply to high-end investment properties — from a flat rate of 10 per cent, rates of 12 to 20 per cent will apply to non-owner occupied homes with over S$30,000 annual values. Tax refunds on vacant properties will be removed from next year.

Mr Tharman said at a Channel NewsAsia forum on the Budget last night: “Our property taxes are not very high and I think it’s a permanent state of affairs, we have to find some way of getting tax revenue in the long term, it’s better to tax wealth than to tax income. The economists call it an efficient tax ... and it’s fair, it’s fair for wealthy people to pay more taxes.”

Also made more progressive was the vehicle tax system, with more expensive cars to attract higher Additional Registration Fees.

For the lower-income group, 40,000 more Singaporeans will benefit with the Workfare Income Supplement income cap raised from S$1,700 to S$1,900. In total, 480,000 Singaporeans, or three in 10 working citizens, stand to benefit with work done from Jan 1 this year.

Workfare payouts will also go up, with maximum payouts increasing by 25 to 50 per cent. Workers will now receive more cash in hand.

CPF contribution rates for both employers and low-wage employees will go up from next year. A 45-year-old worker earning S$800 a month will have his employer contributing 16 per cent to his CPF (up from 11 per cent) and he would contribute 20 per cent of his income to CPF (up from 16.5 per cent). His take-home pay would increase marginally by S$2 a month, but by the time he turns 65, there would be S$15,000 more in his CPF account.

The changes in Workfare payouts and CPF contribution rates will see a small percentage of Workfare recipients taking home less pay; over 95 per cent will see an increase in take-home pay, according to a Manpower Ministry spokesperson.

Turning to the social safety net,

Mr Tharman said a review of the healthcare financing system is underway, with the intention for Singaporeans’ out-of-pocket share of medical payments to fall.

Seniors who require milk feeds, or assistive devices like shower chairs and motorised wheelchairs, could benefit from an expanded fund called the Senior’s Mobility and Enabling Fund. Currently called the Senior’s Mobility Fund, it will be topped up from S$10 million to S$50 million.

Other moves to address rising cost of living include a one-off GST Voucher payment, service and conservancy charges rebates and personal income tax rebates.

And to sustain social mobility, the Government is strengthening opportunities for lower and middle-income children in the education system.

Mr Tharman said in his Budget speech: “Meritocracy alone will not assure us of this … We cannot change the fact that children have different family backgrounds that bring very different advantages and disadvantages.”

To this end, spending on the pre-school sector will more than double over the next five years to exceed S$3 billion. An Early Childhood Development Agency will drive improvements, and more anchor operators will be added to boost pre-school places by 16,000 by 2017, nearly doubling the current capacity of 17,000.

In public schools, 600 extra teachers will be added as the learning support programme expands beyond Primary 1 and 2. The number of school-based student care centres will be “significantly” expanded, and online instructional materials taught by specialists and experienced teachers will be developed, said Mr Tharman.

National University of Singapore (NUS) political scientist Reuben Wong noted that the impact of these initiatives could be potentially significant but it would take a long time for the results to be seen. Still, NUS sociologist Paulin Straughan applauded moves to ensure children from challenged backgrounds “do not start too far behind”.

Rounding up his speech, Mr Tharman said: “We are taking further steps towards a more inclusive society — starting with our children, helping lower income workers, and providing better lives for our retirees.”