Slew of Budget goodies unveiledBy Angela Lim – February 18th, 2011
Singapore’s Minister for Finance, Mr Tharman Shanmugaratnam, delivers the Budget Speech for the Financial Year 2011. (AP Photo)
Singaporeans will receive a total of S$6.6 billion of benefits in the 2011 Singapore Budget announced by Finance Minister Tharman Shanmugaratnam on Friday.
$3.2 billion Grow and Share Package: The average Singaporean household will receive S$3,500 from this year’s Budget. This will come from the S$3.2 billion to be spent on the “Grow and Share Package” and S$3.4 billion in longer-term Social Investments for households this year.
All adult Singaporeans will also receive Growth Dividends to share the fruits of last year’s exceptional economic growth. The majority of Singaporeans – 80% – will get $600 to $800 each.
CPF rate revision: The Government will raise the employer contribution rate to CPF accounts by another 0.5 percentage points, from 15.5% to 16%, which will restore the total contribution rate to 36%. The additional 0.5% will go into the Special Account.
The Government will also revise the CPF salary ceiling from $4,500 to $5,000 per month to keep pace with income growth in recent years. This will align the salary ceiling back to the 80th percentile income, and help middle-income Singaporeans.
Radio and TV licence fees removed permanently: The annual licence fee of S$110 for televisions and S$27 for vehicle radios will be removed with immediate effect. Those who have not paid this year’s fees will not have to make the payment, while a refund will be given to those who have already paid.
Mr Tharman said that’s because the fees are losing their relevance. He said televisions are no longer limited to middle and higher-income groups, with 99 per cent of lower-income households owning them today.
Tax cuts: Singaporeans will receive a personal income tax rebate of 20% for individual resident taxpayers for YA 2011. The rebate will be capped at $2,000. Taxes will be reduced significantly for middle and upper-middle income families. Marginal tax rates will be reduced for first S$120,000 of chargeable income.
Levy increase for foreign workers: The Government will also introduce more levy increases on foreign workers for all sectors this year. Most of the additional measures will be phased in at six-monthly intervals, starting only from 1 January 2012, and extending till 1 July 2013, one year beyond the previous schedule.
S$10 billion home upgrading: $10 billion will be spent to upgrade homes and rejuvenate estates over the next 10 years. This is a major effort to preserve the value of HDB flats and will go towards the Home Improvement Programme (HIP), Neighbourhood Renewal Programme (NRP) and Lift Upgrading Programme (LUP), it will invest up to $55,000 per flat.
Low-income groups will also receive additional housing subsidies to better afford their homes. The Government will set aside S$175 million each year for the new Special CPF Housing Grant to help the bottom 50% Singapore households own their homes.
For more details, refer to the speech summary below or read the full transcript here.
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5.21pm – Mr Shanmugaratnam wraps up by stressing that despite the challenges of social mobility as society matures, Singapore will only continue to succeed if Singaporeans strengthen family ties, hold aspirations for a better life, believe that they can get there by working hard and preserve a strong sense of community. This would allow society to stay dynamic and achieve next transformation as a nation.
5.18pm – The Estimated Budget Position for Singapore in FY2011 is a surplus of S$0.1 billion.
5.16pm – The average Singaporean household will receive S$3,500 from this year’s Budget.
5.12pm - To help households cope with rising costs, Mr Shanmugaratnam announces plans to top-up U-Save and S&CC rebates. This will cost the Government S$200 million.
5.10pm – NSmen and NSFs including those below 21 years of age will be given an additional S$100 of Growth Dividends. This will benefit about 2.5 million Singaporeans and cost the Government S$1.5 billion this year. Singaporeans can look forward to receiving their Growth Dividends and CPF top-ups by 1st May 2011.
5.09pm - All adult Singaporeans will receive Growth Dividends to share the fruits of last year’s exceptional economic growth. The majority of Singaporeans – 80% – will get $600 to $800 each.
5.07pm – Mr Shanmugaratnam announces that the Government will significantly increase spending on arts and culture. Over the next five years, the average annual programme spending will be about $365 million, an increase of more than 50% over the current level.
5.06pm - The Government will spend $10 billion to upgrade homes and rejuvenate estates over the next 10 years. This is a major effort to preserve the value of our HDB flats. Under the Home Improvement Programme (HIP), Neighbourhood Renewal Programme (NRP) and Lift Upgrading Programme (LUP), it will invest up to $55,000 per flat.
5.04pm – Low-income groups will get additional housing subsidies to better afford their homes. The Government will set aside S$175 million each year for the new Special CPF Housing Grant to help the bottom 50% Singapore households own their homes.
4.59pm - The Government will top-up the CPF Medisave Accounts of Singaporeans aged 45 and above this year. Those aged 45 to 49 will receive up to $300, while those aged 50 to 59 will get a top-up of up to $400. Older Singaporeans will receive more, with those 80 and above getting up to $700.
The Medisave top-ups will benefit approximately 1.3 million Singaporeans, and will cost the Government $500 million.
4.56pm – To build up Singapore’s long-term care sector for the elderly, Mr Shanmugaratnam will top up the Eldercare Fund by $700 million to reach its previous target size of $2.5 billion. He will also put $1 billion into a new Community Silver Trust, to provide one-to-one matching for donations to VWOs that provide long- term care to Singaporeans.
4.49pm - Mr Shanmugaratnam will increase funds dedicated to needy students by topping up each primary and secondary school student’s Edusave account by $130. The Government has also committed an additional $100 million in Edusave grants to schools.
Currently, a child from a low-income family who starts off in childcare and proceeds through to a polytechnic diploma, already pays only 3% of the cost of his education. With the enhancements we are making today, he will pay just 1% of the cost of his education.
4.47pm – The Government will introduce a new Child Development Credit scheme for all Singaporean children aged six and below. The Credits will be provided from time to time, when there are surpluses to share with Singaporeans.
The Child Development Credit can be used to pay for their children’s preschool, childcare, and medical expenses. 80% of families with young children will receive $400 per child. The other 20% who are better off will receive S$300.
4.45pm – TV and radio license fees will be removed permanently. The Government will do away with the $110 annual licence fee for televisions, with effect from January 2011. The $27 annual fee for vehicle radios will also be removed.
4.43pm - Singaporeans will receive a personal income tax rebate of 20% for individual resident taxpayers for YA 2011. The rebate will be capped at $2,000.
4.41pm - Taxes will be reduced significantly for middle and upper-middle income families. Marginal tax rates will be reduced for first S$120,000 of chargeable income.
4.38pm – Mr Shanmugaratnam stresses the Government’s focus on helping low-income groups through education, employment and home ownership. He said lower-income houses received more transfers than taxes paid last year.
New measures will add up to a total of S$6.6 billion of benefits. These include S$3.2 billion in the ’Grow and Share Package’ and S$3.4 billion in longer-term Social Investments for households this year.
4.31pm – The Green Vehicle Rebate Scheme will be extended for another year till 31 December 2012.
4.23pm – The Government will top up S$1 billion top-up for the National Research Fund this year. S$2.5 billion will also be set aside over the next five years under the Economic Development Assistance Scheme.
4.15pm – The Government will introduce further levy increases on foreign workers for all sectors this year. Most of the additional measures will be phased in at six-monthly intervals, starting only from 1 January 2012, and extending till 1 July 2013, one year beyond the previous schedule. This will give companies time to prepare for the changes.
Levies will be higher in the Services and Construction sectors, where the scope for productivity improvements is greatest.
4.12pm – With the outlook for continued growth in 2011, Mr Shanmugaratnam will raise the employer contribution rate by another 0.5 percentage points, from 15.5% to 16%, which will restore the total contribution rate to 36%. The additional 0.5% will go into the Special Account.
The Government will revise the CPF Salary Ceiling from $4,500 to $5,000 per month to keep pace with income growth in recent years.
This will align the salary ceiling back to the 80th percentile income, and help middle-income Singaporeans. To give employers sufficient time to adjust, both these changes will only take effect in September this year.
4.08pm – To enhance support for business restructuring and skills upgrading, the government will be doubling investment in the National Productivity Fund. Mr Shanmugaratnam will top up the NPF with another $1 billion this year. This will bring the total fund size to the target of $2 billion.
Mr Shanmugaratnam will also make a $500 million top-up to the Lifelong Learning Endowment Fund (LLEF), thus increasing the fund size to $3.6 billion.
3.56pm – Mr Shanmugaratnam says Singapore’s local workforce will expand slowly in the next 10 years. We also should not become ever more dependent on foreign labour. We must therefore restructure our economy and raise skills in every job, so that productivity becomes the key driver of growth.
3.50pm - To raise Singaporeans’ incomes over the next decade, Mr Shanmugaratnam stresses Singaporeans must first sustain our economic growth. The vast majority of Singaporean households, including both the median and the lower-income households, have seen significant improvement in real incomes in the last five years, and consequently for the decade as a whole.
3.40pm - Singapore’s strong growth last year has yielded an improved fiscal position for FY2010. The better growth is estimated to account for about 80% of the increase in revenues over what we projected a year ago. The property market was also much stronger, resulting in further increases in stamp duties and other revenues.
The Government had originally estimated an Overall Budget Deficit of $3.0 billion or about 1.0% of GDP for FY2010. Given the much improved economic performance, we now expect the overall budget to be close to a balanced position, with a small deficit of $0.3 billion or 0.1% of GDP.
3.37pm - Mr Shanmugaratnam said Singapore’s economy is expected to grow more slowly this year as the nation is well past the rebound from the crisis.
Growth in the emerging economies, which accounts for two-thirds of global growth, is expected to remain strong. However, these economies are also seeing a build-up of inflationary pressures. Food and other commodity prices have climbed sharply, because supply has been affected by harsh weather conditions while demand continues to grow in China and elsewhere.
He stresses inflation as a key concern for everyone this year, and especially for low-income families. CPI inflation was 4.6% year-on-year in December 2010. He said Singaporeans can expect inflation to be around 3% to 4% this year, higher in the first half before moderating later in the year.
3.30pm – Mr Shanmugaratnam says Singapore’s economy has done exceptionally well in the past year. After two weak years in 2008 and 2009, when growth was close to zero, our GDP grew by a record 14.5% in 2010. Unemployment is down to the levels seen in early 2008, before the crisis.
He said Singapore’s stronger recovery was partly good fortune, as global trade and confidence in Asia turned around. But it also reflected the way the nation was well-prepared.
Follow updates on Mr Tharman Shanmugaratnam’s speech live here on Yahoo! Fit to Post Singapore.
