Singapore’s Minister for Finance, Mr. Heng Swee Keat, has recently delivered a speech about the future 2021 Budget to the Parliament. Here is a summary.
The year 2020 was extremely concerning for Singapore evidently due to the COVID-19 outbreak. Although this sanitary crisis received strong awareness from the government (100S$ billion budget plan), the country has faced the biggest deficit in its history since the independence (5,4% recession). Under normal circumstances, Singapore is known for achieving each year a budget surplus. Thankfully, the government has been able to partially finance the 2020 budget by borrowing in past reserves. Although last year’s budget was geared towards emergency measures, the 2021 Budget is henceforth focused on supporting industries that still struggle with the pandemic.
I – Budget stance in consideration of COVID-19
First and foremost, an 11S$ billion COVID-19 Resilience Package was announced to support different sectors but most importantly the public health one. Half of the budget will be relocated for vaccines and tests. The other half will concern the Jobs Support Scheme (“JSS”) which was initiated in February 2020. The goal is to extend this aid all the way through December 2021 depending on a percentage scale upon which three different tiers will be subject to (e.g., tier 1: aviation, tourism; tier 2: restaurants, culture; tier 3: media).
Moreover, the government plans to allocate budget for a SGUnited Jobs and Skills Package. It includes plenty of various programs, notably the Jobs Growth Incentive (“JGI”), SGUnited Traineeships (“SGUT”) or the SGUnited Skills (“SGUS”) to name a few. For your information, these programs were conceived to boost recruitment and combat unemployment (through allowances) despite the current climate. All of them will be extended to March 2022.
Furthermore, the Ministry wishes to introduce a Household Support Package (900S$ million) to assist low-income families and workers by issuing cash payments through GST Voucher (200$). These will help households with daily living expenses. More than 1,4 million Singaporeans are expected to benefit from it. Additionally, children born a certain year will receive aid for education-related costs.
At last, the minister proposes to expand measures encouraging philanthropy and volunteerism to 2023. These measures will hopefully encourage donations to Institutions with Public Characters (“IPC”) thus qualifying for a 250% tax reduction.
II – Budget stance outside of COVID-19 consideration
The Singapore Green Plan for 2030 was announced a week prior by the Ministry of Sustainability and the Environment. The minister of Finance indicated its main focus is to prevent the rise of climate change through subsiding research on renewable energy or low-emission vehicles (30S$ million for Electric Vehicles related initiatives). Petrol duty rates will increase as well.
Besides, the government wishes to maintain a vibrant business ecosystem in contempt of the current economic climate. In order to do that, Singapore will expand digital connectivity while simultaneously investing in three key platforms: The Corporate Venture Launchpad, The Open Innovation Platform and The Global Innovation Alliance. These will catalyze cross-border collaboration but also guiding local companies. In this drive for innovation, Singapore wants to deepen its South East-Asia partnerships and enhance its infrastructure investments in the region.
At last, tax changes were ineluctably discussed by the ministry. Goods and Services Tax (“GST”), currently at 7%, will increase within the next 2 or 4 years. In addition, the GST will be extended to imports of low-value goods bought online.