A slew of measures to deal with short-term challenges such as the coronavirus outbreak and long-term economic development were introduced by Deputy Prime Minister Heng Swee Keat on Tuesday (Feb 18).
Immediate measures included a $4 billion package to help firms with cash flow and retain workers, and $1.6 billion for household expenses amid the coronavirus outbreak.
More long-term help included $6 billion set aside to cushion the impact of a future goods and services tax (GST) increase, and $8.3 billion to be spent on growing and transforming the economy over three years.
Here are 10 highlights:
1. GST NOT GOING UP IN 2021
The increase in the GST rate by two percentage points from 7 per cent to 9 per cent will not be implemented in 2021. The hike was previously slated to come sometime between 2021 and 2025.
Still, the broad-based consumption tax, levied on nearly all goods and services in Singapore, will need to be increased by 2025, said Mr Heng, who is also the Finance Minister.
A $6 billion package will be introduced when the GST rate is raised to cushion the increase, with most Singaporean households getting offsets to cover at least five years’ worth of extra GST expenses incurred.
Those living in one- to three-room HDB flats will receive offsets amounting to about 10 years’ worth of additional GST expenses.
Every adult Singaporean will get a cash payout of between $700 and $1,600 over five years, depending on their household income and dwelling type.
The GST Voucher scheme will also be enhanced when the tax hike takes place.
2. SUPPORT FOR ALL HOUSEHOLDS DURING CORONAVIRUS OUTBREAK
Singaporean households will receive help to defray household expenses amid the coronavirus outbreak and economic weakness, said Mr Heng.
He announced a $1.6 billion Care and Support Package to benefit all adult Singaporeans aged 21 and older.
They will receive a one-off cash payout of $100, $200 or $300 in 2020, depending on their income in 2019 and home ownership. Parents with one or more Singaporean children aged 20 and younger in 2020 will each also get an extra $100 in cash.
The package also includes a Workfare Special Payment for Singaporean employees and self-employed persons who received Workfare Income Supplement (WIS) payments in 2019, providing additional support for low-wage workers and self-employed persons aged 35 and older in 2019.
Singaporeans aged 50 and older in 2020 will receive a $100 top-up to their PAssion cards.
All Singaporeans aged 21 and older who live in one- or two-room HDB flats and do not own more than one property will receive $100 in grocery vouchers in 2020 and 2021.
All eligible HDB households will also get double their regular GST Voucher – U-Save rebate in the 2020 financial year, which ends in March 2021, through a one-off special payment. Eligible households with five or more members will receive an extra rebate, which means they will receive 2.5 times their usual rebate.
Eligible Singaporean households living in HDB flats will also receive rebates to offset between 1.5 and 3.5 months of service and conservancy charges over the year.
3. HELPING BUSINESSES DEFRAY WAGE COSTS
Companies will receive support to defray wage costs during this difficult period.
Two schemes – the new Jobs Support Scheme and the Wage Credit Scheme, which will be enhanced – will help support enterprises and also help workers stay employed as part of a larger $4 billion Stabilisation and Support Package.
The Jobs Support Scheme will see the Government support all active employers, with the exception of government organisations and representative offices, in retaining their local employees.
The Government will offset 8 per cent of Singaporean and permanent resident employees’ wages, capped at $3,600 per employee monthly, for three months.
This will cost the Government $1.3 billion for the over 1.9 million local employees in Singapore.
The Wage Credit Scheme, which supports enterprises embarking on transformation efforts and encourages employers to share productivity gains with workers by co-funding wage increases, will be enhanced.
The monthly wage ceiling will be raised from $4,000 to $5,000 for qualifying wage increases in 2019 and 2020.
The co-funding levels will be increased by five percentage points to 20 per cent for 2019 and 15 per cent for 2020.
This will see the Government provide about $1.1 billion in support to around 90,000 enterprises which will benefit more than 700,000 Singaporean employees.
4. HELPING BUSINESSES WITH THEIR CASH FLOW
The Stabilisation and Support Package includes economy-wide measures to help businesses with their cash flow during the difficult economic period and ongoing coronavirus situation.
A corporate income tax rebate at the rate of 25 per cent of tax payable, capped at $15,000 per company, will be granted for the tax year of assessment 2020.
The rebate, which will cost the Government about $400 million, will benefit all tax-paying companies.
Several tax treatments under the corporate tax system will also be enhanced for one year to ease cash flow for companies.
The Enterprise Financing Scheme’s Working Capital Loan, which helps small and medium-sized enterprises access financing for working capital needs, will be enhanced for one year from March 2020.
The maximum loan quantum will be raised from $300,000 to $600,000, and the Government’s risk share will be increased to 80 per cent, up from the current 50 per cent to 70 per cent.
Tenants and lessees of government-managed properties can also approach the agencies to discuss options for more flexible rental payments, such as instalment plans.
5. EXTRA SUPPORT FOR SECTORS MOST AFFECTED BY CORONAVIRUS
Five sectors directly hit by the coronavirus outbreak – tourism, aviation, retail, food services, and point-to-point transport services – will receive additional support under the Adapt and Grow Initiative for their operating costs and cash flow, as well as to retain and re-skill workers.
The funding support duration for re-skilling for these sectors will be extended from the current three months to a maximum of six months, and the Government will support employers in these affected sectors to retain and train more than 330,000 local workers.
A 30 per cent property tax rebate for 2020 will be granted for some components of licensed hotels and serviced apartments, as well as prescribed meetings, incentives, conventions, and exhibitions (Mice) venues.
International cruise and regional ferry terminals will receive a 15 per cent property tax rebate, and the integrated resorts will receive a 10 per cent property tax rebate.
The Government will also work with participating financial institutions to introduce a Temporary Bridging Loan Programme for a year to provide additional cash-flow support for tourism sector enterprises.
A $112 million Aviation Sector Assistance Package, co-funded by the Government, the Civil Aviation Authority of Singapore and the Changi Airport Group, will also provide relief to companies affected by the coronavirus outbreak.
This includes airlines, companies in the cargo industry, and other airport stakeholders such as retail and food and beverage tenants at Changi Airport, which will also receive a 15 per cent property tax rebate.
Food services and retail establishments will receive support as well, with rental waivers for hawkers operating in National Environment Agency-managed hawker centres and markets and commercial tenants of government agencies. The rental waivers will cost about $45 million.
A 15 per cent property tax rebate will also be granted to those who operate in qualifying commercial properties, and landlords are urged to pass the rebate on to their tenants.
6. ENHANCEMENTS TO SUPPORT ECONOMY’S TRANSFORMATION AND GROWTH
A total of $8.3 billion will be allocated over the next three years to bolster the Singapore economy’s transformation and growth.
Support to enterprises at each stage of their growth will be enhanced to deepen their capabilities.
This includes an enhancement of Startup SG Equity which will dedicate an additional $300 million to catalyse private investment in Singapore-based deep-tech start-ups in key emerging sectors such as advanced manufacturing and agri-food technology.
The SMEs Go Digital scheme which aims to help SMEs build digital capabilities will also be expanded, covering the needs of 23 Industry Transformation Map sectors, up from 10. New sectors that will benefit include healthcare and food manufacturing.
The Market Readiness Assistance scheme which helps companies in their internalisation efforts will also be enhanced, including an extension of the 70 per cent support level for another three years until end-March 2023.
The Productivity Solutions Grant will also have broader support which includes consultancy services, and the number of sector-specific solutions will also be increased.
An Enterprise Transform Package will also be launched, including the Enterprise Leadership for Transformation programme to support business leaders of promising SMEs in achieving growth.
The Government aims to support business leaders from 900 enterprises over the next three years, and will work with institutes of higher learning, banks and other industry experts to do so.
7. GREATER SUPPORT FOR EDUCATION, FROM PRE-SCHOOL ONWARDS
Pre-university students from lower-income families will get an extra $100 under the Education Ministry’s Financial Assistance Scheme, with the quantum raised from $900 to $1,000.
This will cost the Government $9 million more per year, or a total of $52 million per year.
All students will also get higher transport subsidies, and for secondary school students, more school meal subsidies.
Full-time Institute of Technical Education (ITE) students from the lowest-income families will now receive a 100 per cent fee subsidy from Academic Year 2020.
This is on top of the cash bursary for students from low- and middle-income households, which will also see a quantum increase of up to $200 a year.
The cost of funding bursaries for higher education will climb from $148 million to $198 million per year.
The share of government-supported pre-schools will climb to 80 per cent by around 2025, from just over half today.
Overall, the Government will double spending on the early childhood sector from about $1 billion in 2018 to over $2 billion per year in the next few years.
8. MEASURES TO HELP MIDDLE-AGED WORKERS STAY EMPLOYED
Every Singaporean aged 25 and older will get a $500 SkillsFuture credit top-up, which can be used from Oct 1. The top-up will expire by December 2025.
This is to encourage Singaporeans to use the credits early, and make use of the current economic slowdown to learn new skills, said Mr Heng.
On top of that, those aged 40 to 60 will get another top-up of $500, with the same expiration date.
A new SkillsFuture Mid-Career Support Package will also be introduced to double the annual job placement of locals in that age range to around 5,500 by 2025.
Apart from more capacity for re-skilling programmes, employers who hire those aged 40 and above through such programmes will get 20 per cent salary support for six months, capped at $6,000.
Employers will also get $10,000 under the new SkillsFuture Enterprise Credit to defray out-of-pocket costs of business transformation, job redesign, and skills training by 90 per cent. This will help about 39,000 firms.
The Productivity Solutions Grant, which helps firms to adopt pre-approved digital solutions and equipment, will be expanded to include job redesign consultancy services.
9. SCHEMES TO SUPPORT THE ELDERLY
The Central Provident Fund (CPF) will have a Matched Retirement Savings Scheme from 2021 to 2025, for lower- to middle-income Singaporeans aged 55 to 70 who have not been able to set aside the prevailing Basic Retirement Sum.
Under this scheme, the Government will match every dollar of cash top-up made to their CPF Retirement Account, up to an annual cap of $600. Some 435,000 Singaporeans will be eligible.
Around 250,000 Singaporeans aged 65 and older will also get more help with enhancements to the Silver Support Scheme from Jan 1, 2021.
Quarterly payouts under the scheme will be raised by 20 per cent. The criteria for lifetime wages and household monthly income per person will also be raised.
There will also be a new payout tier for seniors whose monthly household income per person is between $1,300 and $1,800; they now do not receive Silver Support.
Eligible seniors will be notified by CPF Board and start getting payouts from December this year.
The cost of Silver Support will nearly double from $330 million today to $620 million in 2021.
Also from 2021, the Special Employment Credit (SEC) and the Additional SEC will be merged and called the Senior Employment Credit.
Like its predecessors, the new programme gives wage support to employers who hire Singaporeans aged 55 and older, with support tapering as the retirement and re-employment ages are gradually raised.
A new Senior Worker Early Adopter Grant will support companies that raise these ages ahead of legislated changes.
Another grant will be introduced to support companies to formalise provisions for part-time re-employment.
Half the CPF contribution increase from employers, which kicks in next year, will be offset by the Government.
10. BATTLE AGAINST CLIMATE CHANGE
A Coastal and Flood Protection Fund will be set up with an initial injection of $5 billion, to be topped up when possible.
Housing Board (HDB) flats will also have a new Green Towns Programme, to reduce energy consumption, recycle rainwater, and cool the towns.
The Government also aims to phase out all vehicles with internal combustion engines by 2040.
An additional incentive for early adoption of electric vehicles (EVs) will be introduced, with a rebate of up to 45 per cent on the additional registration fee for those buying fully electric cars and taxis. This will start from January next year, for three years.
EVs and some hybrid vehicles will also be taxed less, with a revision in tax methodology for cars from next January.
By 2030, the Government aims to deploy up to 28,000 public charging points for EVs, up from 1,600 currently.
There will also be a lump-sum tax built into the road tax schedule for EVs, while technology to tax by distance is being developed.