Feedback Raised:
Provide GST exemption for basic necessities such as sugar and rice

MOF’s Response:
Providing GST exemption for basic necessities is not an effective way of helping the poor. Firstly, most of the spending of lower-income households is not on basic necessities such as sugar and rice, but on items such as transport, utilities, and other public services where GST is already absorbed by the Government. Secondly, the bulk of GST revenue from basic necessities comes from the higher-income households and foreigners. Should we exempt these goods, we would be providing more of the relief to those who do not need help. Thirdly, exempting basic necessities from GST will mean that GST on non-essentials will have to be higher. This would impact all Singaporeans including the lower-income households. Hence, it is far more effective to keep a single GST rate on all goods, and use part of the revenue collected to provide targeted assistance to low-income families. This is what the Government is currently doing with the GST Offset Package.

Feedback Raised:
Provide more social transfers to help the poor cope with rising costs

MOF’s Response:
As part of Budget 2008, the Government announced a surplus-sharing package worth $1.8 billion for all Singaporeans. Along with Budget 2007’s GST Offset Package to help Singaporeans cope with the GST increase, the Government will be giving over $3 billion to Singaporeans this year.

The lower-income will receive the highest payouts of Growth Dividends, GST Credits, and Senior Citizens’ Bonuses. HDB households will also get up to $200 million in S&CC, U-Save and rental rebates. These benefits exceed the increase in costs of living that lower-income families face this year.

Feedback Raised:
Raise the maximum monthly income eligibility of Workfare Income Supplement (WIS) scheme to $1,700 from $1,500, so that not just the bottom rung of the workforce benefit.

MOF’s Response:
The current income ceiling of $1,500 covers the bottom 30% of the working population, which is the scheme’s target segment. Nevertheless, the Government will review the scheme by 2010 taking into account all public feedback.

Feedback Raised:
Increase the payout from the Public Assistance Scheme

MOF’s Response:
As announced in the Budget 2008 Statement and MCYS's Committee of Supply, the Public Assistance rates have been increased by amounts ranging from $40 to $165 per month. The eligibility criteria for the Public Assistance Scheme has also been widened to allow individuals who are permanently unable to work and whose family members are unable to provide adequate support to receive Public Assistance as well.

Feedback Raised:
Remove Estate Duty (ED)

• Cost of ED administration is disproportionate to revenue
• ED diminishes Singapore's appeal as a financial centre
• ED exemption limits are too low, hitting the middle-class while the rich can tax-plan away

MOF’s Response:
As part of Budget 2008, the Finance Minister removed Estate Duty for all deaths with effect from 15 Feb 2008. The decision was made following a comprehensive review taking into account feedback from the public.

Feedback Raised:
Reduce personal income tax (PIT) to mitigate rising costs of living and retain mobile talent

MOF’s Response:
Singapore's personal income tax regime is already one of the most competitive in the world. Even when compared to Hong Kong with its low standard PIT rate of 15%, most individuals remain better off in Singapore as our marginal tax rates are lower and more progressive. The Government will continue to monitor the effective tax burden of Singapore tax residents and ensure that Singapore remains a compelling place to attract and keep talent, including those at the top end.

Cutting tax rates to mitigate the rising costs of living is however not an effective measure. This is because two-thirds of workers in Singapore do not pay any income tax.

Feedback Raised:
Keep the corporate tax regime competitive and simple

MOF’s Response:
Singapore's tax regime remains amongst the simplest in the world. Taking into account corporate tax and other taxes like GST, Singapore was rated as the second easiest place for businesses to pay taxes in the 2008 World Bank-PricewaterhouseCoopers "Paying Taxes" survey.

The Government will continue to ensure a competitive tax regime to reward the success and enterprise of our companies. It made a decisive push in Budget 2007 to cut the headline corporate tax rate from 20% to 18% and expand the Partial Tax Exemption regime to provide a lower effective tax rate for small and medium enterprises. In Budget 2008, the Government introduced tax incentives to encourage innovation and entrepreneurship, as well as a special allowance for fixtures and fittings which benefit F&B and retail companies in particular.

Feedback Raised:
Enhance tax relief given for course fees and look into ways to provide assistance to encourage lifelong learning

MOF’s Response:
As part of Budget 2008, the course fee tax relief was enhanced to provide more support to individuals seeking continual upgrading:

1. For approved vocational qualifications, taxpayers can claim the tax relief regardless of whether the course is relevant to their current professions.
2. For courses leading to an approved qualification, the tax relief claim can be made within 2 years of assessment from the year of assessment relating to the year in which the courses were completed.

Feedback Raised:
Offer more bursaries and scholarships to needy students

MOF’s Response:
As part of Budget 2008, the Government has significantly enhanced bursaries for lower-income students, and extended support to more middle-income tertiary students.

Feedback Raised:
Increase R&D grants, tax incentives and investments to encourage utilisation of alternative energy sources

MOF’s Response:
The Government notes the rising public awareness on the need for alternative energy use and sustainable development. Indeed, it is actively supporting R&D in renewable energy. For instance, the Government allocated $170 million to support clean energy R&D, in particular for solar energy and fuel cells. Additional funding was also set aside to support test-bedding initiatives such as the $38 million Singapore Initiative on New Energy Technology (SINERGY) Centre, which provides a platform for the development and test-bedding of advanced energy solutions.

Singapore has also managed to attract large clean energy players such as Renewable Energy Corporation's (Norway) $6.3 billion solar manufacturing complex.

In the area of sustainable development and climate change, two inter-ministerial committees have been set up to review policies and chart strategies from a holistic angle. New incentives provided in Budget 2008 include:

1. A new $9 million grant that helps offset the cost of upgrading façade features of buildings to improve their overall energy efficiency.
2. A $50 million Sustainable Energy Fund to build competency in energy management and support energy efficiency programmes. 

Feedback Raised:
Increase incentives to encourage the use of hybrid cars

MOF’s Response:
There is currently a Green Vehicle Rebate (GVR) to incentivise the purchase of hybrid cars. The GVR is set at 40% of the Open Market Value (OMV) to offset the Additional Registration Fee (ARF) of a new hybrid car. The Government will conduct regular reviews to see if there is a need to further promote the use of hybrid vehicles.

Feedback Raised:
Impose a CO2 emission tax

MOF’s Response:
The Government already employs the use of incentives to mitigate carbon emissions (e.g. by improving energy efficiency). Whilst we keep an open mind to implementing carbon-based taxes, there is still considerable international debate on the appropriate greenhouse gas mitigation mechanism to adopt. Before international consensus on the post-Kyoto protocol (which ends in 2012) climate regime can be reached, introducing punitive measures could increase business and living costs without achieving the desired outcome for Singapore.

A prematurely implemented carbon emissions tax would be particularly counterproductive for businesses if the targeted activities can simply move to other countries without similar carbon constraints. In such a scenario, Singapore will end up incurring economic costs without achieving the environmental benefit of a reduction in global emissions.

Feedback Raised:
Growth Dividends were very welcome and Singaporeans looked forward to receiving the payouts. Nevertheless, some members of the public felt that the Annual Value of homes was not the best way to determine Growth Dividend payouts.

MOF’s Response:
We agree that the Annual Value (AV) of the place of residence is but a proxy of an individual’s wealth and cannot be the sole criterion to determine the payout of Growth Dividends. As such, the Government relies on not just the AV of an individual’s place of residence but also his Assessable Income (AI). These two criteria provide a fuller picture of the individual’s financial circumstances and ensure a more targeted means of distributing Growth Dividends to Singaporeans who need it most.

Feedback Raised:
The personal income tax rebate was also well-received, especially by the middle-income. Some feedback was received however that the money spent on the rebate could have been channeled to the Growth Dividend package to help the lower-income.

MOF’s Response:
Budget 2008’s surplus-sharing package is for all Singaporeans, as every citizen contributes to the growth and success of Singapore. The income tax rebate is to recognize the contribution of taxpayers, but it comes with a cap so that more benefits can go towards the middle-income groups. Nevertheless, Singaporeans who feel that they do not need their Growth Dividends can donate their payouts to a charity of their choice.

While the lower-income may not stand to benefit from the tax rebate, they get the highest payout of Growth Dividends, GST Credits and Workfare Income Supplements, and receive the most benefits when seen as a percentage of household income.

Feedback Raised:
There seemed to be no specific benefit for housewives in Budget 2008.

MOF’s Response:
Housewives actually stand to receive more Growth Dividends (up to $600) than working Singaporeans as they fall in the Assessable Income (AI) category of $5,000 or less. This is also the same design in apportioning GST Credits and Senior Citizens’ Bonuses which are part of Budget 2007’s GST Offset Package.

Feedback Raised:
The innovation incentives – 150% deduction, R&D Tax Allowance and RISE scheme would encourage both small and big businesses to engage in innovation. In particular, RISE would help R&D-intensive start-ups with cash-flow issues. There was however concern that not all companies, such as those involved in traditional businesses, can benefit from the initiatives.

MOF’s Response:
The main objective of the Budget 2008 innovation incentives is to make innovation more pervasive by encouraging all types of companies to invest in R&D, not just companies in hi-tech sectors. Details of the schemes, including what types of R&D can be covered, are being worked out and will be released by September 2008.

Feedback Raised:
The enhanced bursaries and student loans were welcome, but the increase in university tuition fees was still a concern. Perhaps tuition fees could be tiered so that the bottom rung of households get full subsidy while the top end pay more than the existing subsidy rate.

MOF’s Response:
Our universities have to be able to charge realistic fees so that they can provide a top-quality education for students and sustain their competitive edge. The enhanced system of bursaries announced in Budget 2008 will effectively mean that students from lower- and middle-income households will fork out less in tuition fees than those from higher-income households. Along with the availability of loans, this means that Singaporeans need not be hampered by their financial circumstances when pursuing tertiary education.

Feedback Raised:
40% subsidy for part-time courses should be extended to institutions beyond the 3 local universities and UniSIM.

MOF’s Response:
The subsidy for part-time degree courses is currently extended to the three publicly-funded universities and UniSIM because the Government can be assured of the quality of the programmes provided by these institutions. Being a new scheme, the Government will review the take-up rate and whether the subsidy could be extended to other private institutions over time.

Feedback Raised:
There were not enough incentives to help small businesses with rising business costs (e.g. rising wages, rents, and transport costs)

MOF’s Response:
There were suggestions from the public to give a corporate tax rebate to businesses, just as how it was done in 1999, 2001 and 2002. However, it is important to note that past corporate tax rebates were in response to economic downturns rather than problems caused by strong economic growth. Specifically, businesses in those years were hit by weak demand rather than rising costs.

In contrast, the economy today is expanding. Providing a tax rebate to businesses would not solve the imbalance of supply and demand. Instead, it may cause costs to rise even further. The right solution is to relieve the bottleneck in supply-side factors, which is what the Government has been seeking to do –

Labour: To ease market pressure, the Ministry of Manpower has allowed more flexible access to foreign manpower:

1. The quota for mid-skilled foreign manpower (S-pass holders) was increased from 15% to 25% in January 2008.
2. The Dependency Ratios (the number of foreign workers companies can hire for every local worker) have been raised for the manufacturing, services, construction, process and marine sectors in January 2008.

Office Space: To address immediate office space constraints, the Government has released 15 transitional office sites and vacant state properties, which will yield 150,000 square metres of office space. The Ministry of National Development has also been releasing land to meet office space demand in the medium to longer term. An estimated 1.4 million square metres of office space is expected to be completed by 2012.

Industrial Land: Since the resumption of the Government Land Sales programme in 2003, the Ministry of Trade and Industry has been putting out industrial land which will result in a significant supply coming on stream by 2009. This will be close to twice the area of industrial space released in the last two years, and will ease tight occupancy rates and relieve pressure on rents.

Construction costs: The combination of higher raw material prices and work on major new projects such as the two integrated resorts and petrochemical complexes has caused construction costs to spike. To ease the pressure, the Government has deferred some $3 billion worth of public projects to date.