Deputy Prime Minister and Minister for Finance, Mr Heng Swee Keat, delivered Singapore’s Financial Year 2020 Budget Statement on 18 February 2020.
The 2% increase in GST will not be implemented in 2021 keeping in mind the current state of the economy. However, the GST increase will still be needed by 2025, and the government will assess the appropriate time to announce it.
When the GST is raised, Singaporeans will be provided a S$6 billion Assurance Package. This S$6 billion will be set aside to cushion the impact of the GST increase. Households will receive offsets equivalent of 5 years’ worth of additional GST expenses incurred. Low-income households will receive offsets equivalent of 10 years’ worth of additional GST expenses incurred.
Singaporeans living in 1 to 3 room HDB flats will receive offsets equivalent to about 10 years’ worth of additional GST expenses incurred.
A total of $8.3 billion will be set aside over the next 3 years to help Singapore enable in its transformation and growth efforts. There are three main areas for this:
Our start-up ecosystem is ranked in the top 15 for the global start-up ecosystem report. As part of deepening enterprise capabilities, the government will set aside an additional $300 million under the StartupSG equity.
The government expects to draw in more than $800 million of private funding in the next 10 years.
There are two packages as part of this transformation and growth efforts to help businesses:
Budget 2020 will help support Singaporeans acquire new skills in the midst of structural changes in the global economy. This will be done through the Next Bound SkillsFuture. The 3 key elements of this are:
All Singaporeans aged 25 years old and above will receive a SkillsFuture Credit top up of $500. This top up will be available from October 2020 and will expire by the end of 2025. This is to encourage Singaporeans to take action earlier to learn new skills and make the best use of this period of economic slowdown.
To encourage employers to embark on the upskilling of workforce. This will help companies defray up to 90% of transformation costs. Most of the companies that stand to benefit from this will be SMEs. The Productivity Solutions Grant will also be expanded.
This focuses on mid-career workers in their 40s and 50s to help them stay employable and move on to new jobs and new roles. The aim is to double annual job placements of people in their 40s and 50s.
The government plans to achieve this by:
The aim of this package is to help our workers stay employed in this time of slow growth.
A new cash grant will offset 8% of local workers’ wages for 3 months to help them stay employed amid the COVID-19 crisis. This will cost the government $1.3 billion and benefit all enterprises and their employees and will be given by the end of July 2020.
To help enterprises with cash flow, there will be a corporate income tax rebate for the year of assessment (YA 2020) at 25% of tax payable, capped at $15,000 per company. This is to benefit all tax paying companies, costing the government $4 million. The wage credit scheme will also be enhanced to support wage increases for Singaporean workers.
A total of $800 million has been aside to help the economy recover from COVID-19, even as the severity and duration of COVID-19 remains unclear. The bulk of this will go to the Ministry of Health. This is on top of what’s already committed to public health every year.
Singapore’s economy grew by 0.7% in 2019 — recording the weakest growth since the 2008 financial crisis. Tourism and aviation are most directly affected by COVID including visitor arrivals and hotel occupancy. Affected supply chain created ripple effects on other sectors. The Ministry of Trade and Industry has downgraded GDP from 0.5-2.5% to -0.5-1.5%. Deputy Prime Minister and Minister for Finance Heng Swee Keat stated that Singapore must be prepared that the economic impact may be worse than predicted.
To help workers stay employed, the Government will support businesses by defraying their wage cost through two schemes, as well as redeployment programmes for selected sectors.
The proportion of wages co-funded by the Government will also be increased by five percentage points to 20 per cent and 15 per cent, for 2019 and 2020 respectively.
Together with the Jobs Support Scheme, this will support employers in these sectors retain and train more than 330,000 local workers.
Changi Airport will receive a 15 per cent property tax rebate. Rebates will also be given on aircraft landing and parking charges.
There will also be assistance for ground-handling agents and rental rebates for shops and cargo agents at Changi Airport.