Every budget brings about new hopes of economic empowerment and new dreams of upliftment for people. During these past 2 years, the government and everyone in the country rallied together to get through the challenge of the COVID pandemic. The budgets during this period were more focused on investing in people and enterprises to build a better, secure Singapore filled with opportunities for all.
Everyone will have heard of the word budget at least once. We even discussed teaching budgeting to young children in a previous blog of ours. Similar to that, a budget plan of a nation includes the incomes, expenditures, and planning of expenses for the next financial year. The budget of countries involves billions of trillions of dollars in incomes and expenditures. It is a vital metric as it affects the lives of every person living in the country and as well as anyone associated with it in any economic exchanges. So, exactly 10 days after the budget was announced, let us take a look at the key points of this year’s budget.
Rise in GST
The government has announced that the increase in Goods and Service Tax(GST) will only be in 2023. The increase will be structured into a 2 step increase: 8% from January 1, 2023, and 9% from January 1, 2024. This increase is estimated to bring about an increase of 0.7 per cent of GDP in revenue annually.
Steps to cushion the impact of GST
The rise in GST will impact every section of society and every aspect of life. The government has thus announced measures to help the public so that they can cushion the increase.
- An additional $640 million will be topped up with the already announced $6 Billion Assurance Package.
- Lower to middle-income households to benefit from enhanced permanent GSTV scheme.
- Every Singapore citizen 21 years or older will receive $700 to $1,600 in payouts over the next five years.
- Senior Citizens aged 55 or above will receive payouts of $600 to $900 over 3 years.
- $400 Community Development Council (CDC) vouchers will be allocated to households in 2023 and 2024.
- MediSave top-ups worth $450 for all Singaporean children and senior citizens over the next three years.
Household and Families:
Finance Minister Lawrence Wong announced in his Budget Speech that households will receive vouchers and rebates to help them cope with the higher prices due to inflation.
- All households will receive $100 worth of CDC vouchers this year that can be used at participating heartland shops and hawker centres.
- Around 950,000 households will get double GST Voucher – U-Save rebates (up to $285 more) for April to December.
- About 790,000 Singaporeans below the age of 21 will get a $200 top-up to their Child Development Account, Edusave account, or Post-Secondary Education Account
Income and Property Tax
There will be an increase in Income tax for people in the top-earning brackets.
- Resident taxpayers with income over $500,000 up to 1 million will be taxed at 23% (previously 22%) and those with income over $1 million will be taxed 24% (previously 23%). This is expected to raise about $170 million in additional tax revenue in a year.
- Personal tax for non-owner-occupied properties increased to 36% (previously 12%)
- For owner-occupied homes, a portion of annual value over $30,000 was raised to 32% (previously 6%)
- An additional registration fee will apply to cars for the portion of the open market value over $80,000 at a rate of 220%.
For Businesses
Businesses will continue to get targeted support to cope with the ongoing challenges amid the COVID-19 pandemic.
- A $1000 per local employee payout (up to $10,000) to SMEs that were affected by COVID 19 restrictions.
- For businesses that are self-run or do not hire employees, a $1,000 payout will be given.
- Jobs Growth Incentive (JGI) is extended to September to encourage the hiring of workers.
- Assistance for the Aviation Sector.
Green Plan & Net Zero Ambition: Carbon Tax
The budget also mentioned the green initiative of Singapore and detailed its ambition on achieving net zero emissions by or around mid-century. As per the plan to achieve it:
- The carbon tax is to be raised to $25 per tonne in 2024 and 2025 and $45 per tonne in 2026 and 2027, to finally reach $50 to $80 per tonne by 2030.
- The current tax of $5 per tonne of emissions will remain unchanged until 2023. For large emitters, there is provision to buy international carbon credits to reduce the carbon tax they will otherwise have to pay.
With such ambitious plans to implement, an increase of $4 billion in total expenditure is expected in the coming year. More of it will be spent on areas of health, defence, and manpower. The budget will continue to be expansionary to support the economy and offer support in these trying times. The expected deficit is $3 billion, compared to $5 billion in the last financial year. This year’s budget is focused more on investing in people and infrastructure and boosting the morale of people, bringing together everyone into a more caring and inclusive society. Let us all get together and work towards building a better country for our children.
Your children might not understand all of these points. Discuss with your children about these and find out how much they understood about them. Clear any doubts and explain them to them. The outcome of every budget will be experienced by future generations more than any of us. So, let them in on the discussions.
You can also check the Ministry of Finance website to get an in-depth view and more details on the budget. Like our nation, most adults need to work with a budget; therefore it may be a good idea to discuss certain takeaways from the budget in the daily conversations with our young ones. May the year of the tiger see our finances improve with a roaring success! 🙂
Exam Smart Tips
Exam Smart Tip #1 – How to Encourage Our Kids to Speak Better?
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Exam Smart Tip #3 – Establishing Routines!
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Exam Smart Tip #5 – Beating the Exam Fever!
Exam Smart Tip #6 – How to Eat Right for the Exams?
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Exam Smart Tip #8 – Taking Stress out of Tests
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