(This Feb. 18 story corrects year of assessment in 18th paragraph, corrects paragraph 34 to show figure is S$1.8 bln (not S$1 bln) and removes reference to RFP in paragraph 14, replacing with ARF)
(Reuters) – Following are some excerpts taken from Singapore’s 2022 budget proposals announced by Finance Minister Lawrence Wong to parliament on Friday.
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SUPPORT PACKAGES
– “There are segments of the economy still struggling. I will therefore provide targeted help for our workers and businesses in these sectors through a S$500 million ($372.61 million) jobs and business support package.”
– “I recognise the immediate concerns of businesses and households and will provide significant additional support … these amount to a significant package of S$560 million to help Singaporeans with their utility bills, children’s education, and daily essentials.”
SPENDING AND REVENUE
– “On the expenditure side, our needs are significant and growing. By 2030 we expect government expenditures to increase to more than 20% of GDP. Most of this increase in spending will go to healthcare.”
– “We will set aside S$6 billion to maintain a multi layer public health defence. This is necessary for us to respond nimbly and confidently to the evolving COVID-19 situation.”
– “On the revenue side we would not have enough to cover additional spending needs… This is why we will make significant enhancements in our tax system in this budget.”
WEALTH TAXES
– “Wealth taxes are therefore needed to build a fairer society where everyone can aspire to succeed, regardless of their backgrounds … Ideally, we would want to tax the net wealth of individuals. But such a tax is not easy to implement.”
– “I will increase the property tax rates or non owner-occupied residential properties which includes investment properties. For such properties, I will increase the property tax rates from 10 to 20% … to 12 to 36% of all non owner-occupied residential properties.
– “When fully implemented, they will raise our property tax revenue by about $380 million a year.”
– “I will also tax luxury cars at a higher rate to make our vehicle tax system more progressive. I will introduce an additional ARF (additional registration fee) tier for cars at a rate of 220% for the portion of open market value in excess of $80,000.”
GOODS AND SERVICES TAX
“I also understand the concern that Singaporeans have about the GST increase taking place at the same time as rising prices. I have therefore decided to delay the GST increase to 2023 and to stagger the increase over two steps. The first increase will take place on first January 2023, from 7 to 8%. And the second increase on first January 2024, from 8 to 9%.”
CORPORATE AND INCOME TAXES
“I will therefore increase the top marginal personal income tax, or PIT rate, with effect from the year of assessment 2024. For the portion of chargeable income in excess of $500,000 up to $1 million will be taxed at 23%, while that in excess of $1 million will be taxed at 24% both up from 22% today. This increase is expected to affect the top 1.2% of personal income taxpayers and will raise $170 million of additional tax revenue per year.
-“Our corporate tax system will need to be updated due to global tax developments.”
“What this means is that if such an MNE (multinational enterprise) were to have an effective tax rate of less than 15% in Singapore at the group level, other jurisdictions such as its home jurisdiction can collect the difference up to 15%.”
“We will adjust our tax system in response … We are exploring a top-up tax called the Minimum Effective Tax Rate, or METR. The METR will top up the MNE group’ss effective tax rate
in Singapore to 15%.”
INVESTMENT AREAS
– “This budget will set up the key changes we must make to invest in new capabilities we must take to invest in new capabilities, advance our green transition, review and strengthen our social compact and develop a faired and more resilient structure.”
– “We will also invest in future technologies like 6G, to ride the next communications and connectivity wave.”
– “Alongside infrastructure improvements I will set aside an additional S$200 million offer the next few years to enhance schemes and build digital capabilities in our businesses and workers.”
FOREIGN EMPLOYMENT AND WAGES
– “Let me emphasise that Singapore will continue to stay open and welcome talent from around the world. The adjustments in our foreign worker policies apply mainly to the broad middle of the workforce.”
– “We will update the framework for employment pass (EP) holders… From September this year the minimum qualifying salary for new EP applicants will be raise from the current S$4,500 to S$5,000. For the financial sector, which has a higher salary norms, this will be raised from the current S$5,000 to S$5,500.”
– “We will refine how we assess EP applications to improve the complementarily and diversity of our foreign workforce and also to increase certainty and transparency of businesses.”
– “All of us, businesses, consumers and taxpayers will have to do our part and contribute to uplifting our lower wage workers. I recognise that some firms may need time to adjust … Others may find it difficult to raise prices in the short term to support the wage increases.”
– “I would therefore introduce the Progressive Wage Credit Scheme, or PWCS, to provide transitional support for businesses.”
– “Under the PWCS, the government will co-fund the wage increases of lower wage workers between 2022 and 2026. For workers earning up to S$2,500 the PWCS co-funding rate will be 50% in the first two years 30% In the next two years before tapering to 15% in 2026.”
– “We will spend an average of S$1.8 billion per year over the next five years or $9 billion in total for the PWCS and the enhanced Workfare… It is a significant increase and it reflects our shared commitment to uplift our lower wage workers.”
GREEN COMMITMENTS
– “We believe we can bring forward our net zero timeline. We will therefore raise our ambition to achieve net zero emissions by or around mid-century.”
– “The path towards net zero will entail significant economic restructuring and changes in how we live and work in the future. Everyone …will face difficulty choices. Costly investments may be required.”
– “We aim to issue $35 billion in green bonds by 2030 to fund public sector green infrastructure. This will include bonds issued by the government as well as statutory boards.”
– “To move decisively to achieve our new net-zero ambition. You will need a higher carbon tax. I will therefore raise our carbon tax to $25 per tonne in 2024 and 2025 and $45 per tonne in 2026 and 2027 with a view to reaching 50 to $80 per tonne by 2030. The current tax of $5 per tonne remain will remain unchanged until 2023.”
($1 = 1.3419 Singapore dollars)
(Compiled by Martin Petty; Editing by Kim Coghill)
