Budget 2022: Charting Our New Way Forward Together
18 Feb 20221. Minister for Finance Lawrence Wong delivered the Singapore Government’s Budget Statement for Financial Year 2022 in Parliament on Friday, 18 February 2022.
2. Budget 2022 charts our new way forward together. It is a first step in renewing and strengthening Singapore’s social compact in a post-pandemic world, and in realising our vision of a fairer, more sustainable, and more inclusive society. Budget 2022 sets out key plans to:
a. Invest in new capabilities;
b. Advance our green transition;
c. Renew and strengthen our social compact; and
d. Develop a fairer and more resilient revenue structure.
3. The Government will continue to provide targeted support to workers and businesses in harder-hit sectors through a $500 million Jobs and Business Support Package, comprising a new Small Business Recovery Grant for SMEs in sectors most affected by COVID-19 restrictions over the past year and an extension of the Jobs Growth Incentive to encourage firms to hire those who face greater difficulty finding jobs. Various loan schemes will also be extended to support businesses with their cashflow needs.
4. Budget 2022 also introduces a $560 million Household Support Package to help Singaporeans with their utility bills, children’s education, and daily essentials. The package includes additional GST Voucher – U-Save rebates, top-ups to education-related accounts (Child Development Account, Edusave Account, or Post-Secondary Education Account), as well as another set of $100 CDC Vouchers.
Invest in New Capabilities
5. The Government will strengthen our economy’s digital capabilities by upgrading our broadband infrastructure and investing in future technologies. Alongside infrastructure improvements, we will set aside an additional $200 million over the next few years to enhance schemes that build digital capabilities in our businesses and workers.
6. The Government will provide more support for local firms to undertake R&D activities by increasing the capacity of centres in our Polytechnics and ITE to provide research and innovation support to more SMEs.
7. To grow our local enterprise ecosystem, the Government will set aside around $600 million to scale up adoption of the Productivity Solutions Grant. The Government will launch a new initiative called Singapore Global Enterprises to provide customised assistance to larger local enterprises to help them grow and expand to overseas markets.
Invest in our People
8. To encourage more enterprises to foster a culture of lifelong learning at the workplace, the Government will expand the eligibility criteria of the SkillsFuture Enterprise Credit scheme to better support our smaller and micro enterprises. The Government will also set aside $100 million to support NTUC to scale up the Company Training Committees (CTCs).
9. To better support mid-career individuals, Budget 2022 unveils additional training and company attachment programmes to upgrade their skills and improve their employability. The Government will also adjust foreign worker policies to improve local-foreign complementarity.
Advance our Green Transition
10. To play our part in tackling climate change, the Government will raise Singapore’s ambition to achieve net zero emissions by or around mid-century. To this end, the Government will raise the carbon tax to $25 per tonne of greenhouse gas emissions in 2024 and 2025, and $45 per tonne in 2026 and 2027, with a view to reaching $50 to $80 per tonne by 2030.
11. To support firms in emissions-intensive and trade-exposed sectors, the Government will put in place a transition framework to provide existing companies with allowances for a share of their emissions. For households, the Government will provide support, including additional U-Save rebates, to help cushion the impact during the transition.
12. On Green Finance, the Government aims to issue up to $35 billion of public sector green bonds by 2030. To further accelerate EV adoption, the Government will build more charging points closer to where we live.
Renew and Strengthen our Social Compact
13. To uplift our lower-wage workers, the Government will extend the Progressive Wage Model to the retail, food services, and waste management sectors, as well as in-house cleaners, security officers, landscape workers, administrators, and drivers across all sectors.
14. Companies employing foreign workers will also be required to pay all their local employees at least the Local Qualifying Salary, currently set at $1,400 per month.
15. To provide transitional support for businesses, the Government will introduce the Progressive Wage Credit Scheme (“PWCS”) under which the Government will co-fund the wage increases of lower-wage workers between 2022 and 2026.
• For workers earning up to $2,500, the PWCS co-funding rate will be 50% in the first two years, and 30% in the next two years, before tapering to 15% in 2026.
• For workers earning above $2,500 and up to $3,000, the Government will have a lower co-funding rate of 30% in 2022 and 2023, tapering to 15% in 2024.
16. The Government will also significantly enhance the Workfare Income Supplement scheme. From 1 January 2023, the Government will raise the qualifying income cap from the current $2,300 to $2,500 per month.
17. The Government will continue to increase employer and employee CPF contribution rates for workers aged 55 to 70. The Government will also raise the Basic Retirement Sum by 3.5% per year for the next five cohorts turning 55 over 2023 to 2027.
18. The Government will enhance the Fresh Start Housing Scheme to better support families in their journey towards home ownership. KidSTART is on track to support 5,000 children by 2023, and will be progressively scaled up nationwide to support even more eligible families. The Government will launch the Enabling Masterplan 2030 to further strengthen support for persons with disabilities in areas like employment, lifelong learning, and respite care.
Build a Fairer and More Resilient Tax System
19. The Government will adjust the corporate income tax system in response to global tax developments relating to the Base Erosion and Profit Shifting initiative (BEPS 2.0), and is exploring a top-up tax called the Minimum Effective Tax Rate (METR), which will top up the Multi-National Enterprises group’s effective tax rate in Singapore to 15%.
20. The Government has made several adjustments to strengthen the current system of taxes. The top marginal personal income tax will be increased, with effect from the Year of Assessment 2024. The portion of chargeable income in excess of $500,000 up to $1 million will be taxed at 23%, while that in excess of $1 million will be taxed at 24% – both up from 22% today.
21. For non-owner-occupied residential properties, which include investment properties, the Government will increase the property tax rates from 10% to 20% currently, to 12% to 36%. For owner-occupied residential properties, the Government will increase the property tax rates for the portion of Annual Value in excess of $30,000, from today’s 4% to 16%, to 6% to 32%. The increases in property tax will be implemented in two steps, starting with tax payable in 2023.
22. The Government will tax luxury cars at a higher rate to make the vehicle tax system more progressive, by introducing an additional “Additional Registration Fee” tier for cars at a rate of 220% for the portion of Open Market Value in excess of $80,000. The new rates apply to all cars registered with COEs from the second COE bidding round in February 2022.
GST
23. The Government will delay the GST increase to 2023 and stagger the increase over two steps. The first increase will take place on 1 January 2023, from 7% to 8%, and the second increase on 1 January 2024, from 8% to 9%.
24. The $6 billion Assurance Package (AP) was announced in 2020. The Government will enhance the AP with a top-up of $640 million to cushion the impact of the GST increase for all Singaporeans. The enhanced AP will cover at least five years of additional GST expenses for the majority of Singaporean households, and about 10 years for lower-income households.
a. Every adult Singaporean will receive cash payouts totalling $700 to $1,600.
b. Eligible seniors will receive a special GSTV – Cash (Seniors’ Bonus) totalling $600 to $900.
c. Eligible HDB households will receive additional U-Save rebates totalling $330 to $570 depending on flat type.
d. All Singaporean children and seniors will receive MediSave top-ups totalling $450.
e. All Singaporean households will receive two tranches of CDC vouchers worth $200 each in 2023 and 2024. The vouchers can be used at all participating heartland merchants and hawkers, as well as major supermarkets.
25. The Government will continue to absorb GST on publicly-subsidised healthcare and education, and will provide Town Councils with an additional $15 million a year to absorb the additional GST payable on Service and Conservancy Charges. The Government will also not increase Government fees and charges for one year from 1 January 2023. This will apply to license fees, as well as fees charged by Government agencies for the provision of services.
Fiscal Outlook
26. As Minister Wong explained in his Budget 2022 statement, looking beyond the pandemic, Singapore’s spending needs will continue to grow, as the Government tackles structural shifts and invests more to deliver on our longer-term priorities. The total expected draw on past reserves over FY2020 to FY2022 will be up to $42.9 billion, less than the initial draw of $52 billion that the President originally agreed to for FY2020. It reflects our prudence in the use of Past Reserves. The Government will continue to manage expenditure growth with a further 1% cut to the budgets of Ministries and Organs of State to take effect from FY2023. Funds from this adjustment will be channelled towards new priorities.
Fiscal Position
27. For FY2021, we expect an overall deficit of $5 billion or 0.9% of GDP. For FY2022, our budget remains expansionary to support Singapore and Singaporeans in charting a new course for our future. For FY2022, the Government expects an overall deficit of $3 billion or 0.5% of GDP.
28. More details of Budget 2022 are available at www.singaporebudget.gov.sg.
Issued by:
Ministry of Finance
Singapore
18 February 2022