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Ministry of Finance (MOF)

The Ministry of Finance (MOF)’s mission is to create a better Singapore through Finance. A total budget of $757 million, excluding Expenses on Investments (EOIs), has been allocated to MOF in FY2011 to achieve this mission. This sum does not include special transfers or top-ups to funds and endowments.

MOF aims to achieve the following outcomes:

• Sound Public Finances
• Growth with Opportunity for All
• High Performance Government
  
  

Sound Public Finances

MOF ensures that the Government’s fiscal position is sustainable over the medium and long term. It also ensures that Singapore’s reserves are optimally managed to balance the present and future financial needs of Singapore.

The Government had obtained the President’s approval to draw from Past Reserves to fund the Jobs Credit Scheme and the Special Risk-Sharing Initiative under the Resilience Package in 2009 during the global financial crisis. As we have recovered well from the crisis and our fiscal position is on a stronger footing, the Government has put back into Past Reserves the $4 billion drawn earlier for the Resilience Package. There is no legal or constitutional obligation for the Government to do so. However, the Government has decided that it is the responsible and prudent thing to do.

Growth with Opportunity for All

To achieve this outcome, MOF will be undertaking the following major initiatives and programmes to grow incomes and strengthen society:

Growing Incomes: We aim to raise real incomes by 30% over the decade. We will achieve this through raising our productivity – through growing our economy, upgrading our businesses, and raising skills of workers. Productivity growth should contribute to 2/3 of our economic growth over this decade.

Enhancement of Productivity and Innovation Credit (PIC) Scheme

We have enhanced the PIC that was introduced last year to allow businesses tax deductions for productivity investments. Businesses can now enjoy 400% (instead of 250% previously) tax deduction for up to $400,000 (instead of $300,000 previously) of expenditure for each category of the 6 investments. The maximum cash payout option in lieu of tax deductions under this scheme will also be raised from $21,000 to $30,000 for the first $100,000 of their investments. This will be effective for YA 2011 to YA 2013.

To further help with cashflow needed for the investments, businesses may also defer up to $100,000 tax payable for the current year for the same amount of qualifying PIC expenditure incurred in the same year. The deferred tax is to be paid with next year’s tax. This tax deferral option applies to expenditure incurred for YA2012 to YA2015.

Top up National Productivity Fund (NPF)

The Government will top up the NPF with another $1 billion this year. This will bring the total fund size to its target of $2 billion.

Support Enterprise Growth

To support the broadening of our research agenda and increasing commercial outcomes from the Research, Innovation and Enterprise 2015 plan, the Government will inject another $1 billion in the National Research Fund this year.

We will introduce foreign tax credit pooling to facilitate remittance of foreign income to businesses’ Singapore bases. Such pooling will give businesses greater flexibility in the use of their foreign tax credits, reduce their tax payable, as well as simplify tax compliance. This measure will take effect from YA 2012.

We aim to support and nurture globally competitive local companies. The Co-Investment Programme (CIP) was launched in December 2010 to catalyse the supply of capital to Singapore-based enterprises, particularly SMEs. Under Phase 1 of the CIP, we expect about $200 million to be channeled to SMEs with annual revenues below $100 million.

IRAS will be implementing the Electronic Tourist Refund Scheme (eTRS) to streamline the GST refund process for both tourists and retailers. Singapore Customs has also introduced a Trade Facilitation and Integrated Risk-based System, or TradeFIRST this year, to streamline the application process for all Customs schemes.

Key tax changes are introduced to promote the growth of the financial, maritime, trading, biomedical and logistics sectors, such as the following:

• To strengthen Singapore’s position as a regional finance centre, the Government will exempt from withholding tax all interest payments made by banks and similar financial institutions to non-residents¹ for the purpose of their trade or business. This will take effect from 1 April 2011.
• To encourage the growth of the maritime sector, the Government will introduce the Maritime Sector Initiative (MSI) with effect from 1 June 2011. New tax benefits, such as certainty of withholding tax exemption for interest payments on loans to build or buy ships, will also be introduced under the MSI.

Helping Companies with Rising Costs

In view of rising business costs, the Government will provide one-off help for companies this year: a 20% corporate income tax rebate, capped at $10,000 for YA 2011; or an SME Cash Grant amounting to 5% of their revenues in YA 2011, subject to a cap of $5,000. Companies will automatically receive the higher of the corporate tax rebate or the grant when IRAS assesses their YA2011 tax returns.

Strengthen Society: We will enhance support for lower- and middle-income Singaporeans so that all Singaporeans share in the fruits of our economic growth. In particular, we will make investments to enhance Singaporeans’ well-being in the future, and expand support for quality long-term care sector as the population ages.

Sharing Surpluses with Singaporeans

The Government will provide a ‘Grow & Share’ Package of $3.2 billion for households this year. It will benefit all Singaporeans, particularly lower- and middle-income families.

The ‘Grow & Share’ Package comprises the following:

• ($1.5 billion) Growth Dividends to all adult Singaporeans. The amount each Singaporean receives is based on his income and the value of his home, with those with lower income and staying in homes with lower value receiving more.
• ($580 million) Personal Income Tax Rebate of 20% for individual resident taxpayers, capped at $2,000, for YA2011.
• ($504 million) Top up to CPF Medisave Accounts for Singaporeans aged 45 and above.
• ($224 million) Workfare Special Bonus to those on the Workfare Income Supplement (WIS) Scheme.
• ($93 million) Child Development Credit for all Singaporean children aged six and below in 2011, including those born this year. The Credit will help parents pay for their children’s pre-school, childcare, and medical expenses.
• ($194 million) Additional U-Save and S&CC Rebates for Singaporean households living in HDB properties.
• ($30 million) Top up to VWOs and Self-Help Groups to help with the professional development of social workers² and provide further assistance to needy families;
• ($5 million) Top up to School Advisory Committee/School Management Committee (SAC/SMC) Funds, and Special Education (SPED) schools to help needy Singaporean students in mainstream and Special Education schools.

Longer-Term Social Investments to Benefit Households

The Government will set aside $3.4 billion for longer-term social investments in our endowment and trust funds to enhance Singaporeans’ well-being in the future.

In particular, the Government will commit $1 billion to a new initiative, the Community Silver Trust, to develop the long-term care sector through one-to-one matching for donations to Voluntary Welfare Organisations (VWOs) that provide long-term care to Singaporeans.

Top-ups will also be made to the following endowment funds:

• ElderCare Fund ($700 million)
• Medifund ($500 million)
• ComCare Fund ($500 million)
• Lifelong Learning Endowment Fund ($500 million)
  
  

Reduce Personal Income Taxes for All

We will reduce marginal tax rates for the first $120,000 of chargeable income for Personal Income Taxes. Under this new tax structure, all will pay less personal income tax, with middle-income earners enjoying the largest percentage reduction in their taxes. These personal income tax changes will take effect from YA 2012.

We will remove Radio and Television Licence Fees - $110 annually for televisions and $27 annually for vehicle radios – permanently from this year.

High Performance Government

MOF will ensure that resources are utilised in an efficient and effective manner to achieve the desired Whole-of-Government (WOG) outcomes. Some initiatives and programmes are as follows:

Promoting WOG Strategic Outcomes

To improve the accountability of Government, MOF published the Singapore Public Service Outcomes Report (SPOR) in December 2010. SPOR measures the performance the collective efforts by Ministries to address strategic challenges facing Singapore.

Efficient and Effective Use of Resources

To strengthen the cost management of large public sector development projects in Singapore, MOF has introduced the Gateway Process. Under this process, projects above $500 million are subject to staged approvals for concept, design and implementation. A new panel, the Development Projects Advisory Panel (DPAP) has been formed to examine the specifications and designs of the projects at an early stage of project conceptualisation. In addition, MOF is also setting up a new Centre for Public Project Management (CP2M) to provide advisory services on project design and management to public sector agencies.

The Value for Money Review Office (VFM Office) under the Accountant-General’s Department of MOF will continue to conduct regular reviews of Government projects and processes to ensure accountability, value-for-money, and fiscal discipline within the public sector.

We will continue to leverage technology to improve Government productivity. To-date, we have launched 31 integrated government projects, resulting in an estimated cost savings of approximately $140 million. One such example is the Alliance for Corporate Excellence (ACE) project, which provides a shared HR, Finance and Procurement system that can be used by 11 Statutory Boards.

Building a Collaborative Government

Citizens and businesses can look forward to more convenient services and new opportunities to collaborate with Government, as part of the new eGovernment Masterplan, to be launched in June this year. One of the initiatives that we will implement as part of the Masterplan is One-Inbox, a single platform where subscribers can receive electronic correspondences from participating government agencies in place of hardcopies. We will also launch a one-stop portal called Data.gov.sg to facilitate the sharing of government data with the public, and to promote the co-creation of applications and services by individuals and companies through the use of government data.

To find out more about the Ministry of Finance and our initiatives, please visit our website.

¹ Excluding Permanent Establishments in Singapore

² $20 million will be provided to Voluntary Welfare Organisations (VWOs) this year, while Self-Help Groups will receive $10 million over the next two years.