SINGAPORE BUDGET 2021
The Deputy Prime Minister and Finance Minister Mr Heng Swee Keat delivered Budget 2021 on 16 February 2021. Set against the backdrop of global uncertainty amplified by the COVID-19 pandemic, the Budget seeks to provide a balance between rendering immediate help to sectors under stress, and investing in Singapore’s long-term future. It highlights Singapore’s aspirations to find opportunities amidst the crisis and accelerate her transformation journey to emerge as a digital, innovation-led economy post COVID-19.
The Budget aims to navigate the transition by continuing with economic and workforce transformation, strengthening the social compact, building a sustainable future for the people and providing sustainable fiscal boost to the economy.
The S$11 billion set aside for a COVID-19 resilience package aims to address the immediate need to safeguard public health care and re-opening measures, and support workers through the Job Support Scheme and businesses, especially in targeted sectors such as aviation, aerospace and tourism.
Reflecting the need for Singapore to transit beyond the crisis, the Budget acknowledges the imperative of embracing global economic and technological changes. S$24 billion will be earmarked over the next three years to enable businesses and workers to move up the transformation ladder.
For families still coping with uncertainties brought about by the pandemic, the S$900 million House Support Package, which includes a one-off cash payment, will be extended to families during this period of uncertainty. Moving forward, the Minister aims to provide additional measures to support the more vulnerable members of society, low wage workers and families with lower income.
Budget 2021 continues on its expansionary path. This is not unexpected given the uncertain trajectory brought about by the pandemic. In order to ride out the pandemic and emerge successful, Singapore’s business and economic landscape will need to innovate and transform for the future. This year’s Budget also focuses on building three enablers to drive the next phase of transformation:
- Grow a business vibrant community with a strong spirit of innovation and enterprise, deeply connected with Asia and the rest of the world;
- Catalyse a wide range of capital to enable businesses to transform and scale;
- Create opportunities and redesign jobs, for our people to develop their skills, creativity and talents.
A slew of other initiatives will also be introduced to build a sustainable Singapore for future generations. S$60 million will be set aside for a new Agri-Food Cluster Transformation Fund, and up to S$19 billion of green bonds will be issued to finance public sector green projects.
It is heartening to note that the proposed GST rate increase from the prevailing 7% to 9% will take place sometime between next year and 2025 but will happen “sooner rather than later”. The exact timing of the increase will depend on Singapore’s economic outlook. When the increase is implemented, a S$6 billion Assurance Package will help Singaporeans delay the impact of the GST hike.
Apart from imposing GST on imported low-value goods which will come into effect from 1 January 2023, most of the other tax measures announced are refinements to existing reliefs put in place earlier to continue to enhance Singapore’s competitiveness. There are no significant tax changes announced in this Budget.
The hike in petrol duty rates and the signal that the proposed GST rate increase cannot be put off for too long signifies the observance of the principle of fiscal probity, and that tapping the reserves must be done only in severe emergencies. The reserves would not have been available today if conserving our reserves has not been done consistently. Budget 2021 seeks to draw up to S$11 billion on past reserves shows that the storm has not passed. This Budget also recognises the social compact, which calls for a reflection especially by young Singaporeans, having experience of the pandemic, that they must imbibe the same value of resilience that the Pioneer and Merdeka generations had to overcome challenges.
This is a Budget that weaves together the past in drawing on past reserves, the present in providing immediate relief, and ultimately the future by emerging stronger as one Singapore.
27 February 2021
DISCLAIMER: This publication is issued exclusively for the general information of clients and staff of Acutus. The material should not be relied upon without appropriate professional advice. Acutus will not be liable for any loss or damage arising out of or in connection with the material contained in this publication.
© 2021. This publication is contributed by Acutus Tax Services Pte. Ltd. All rights reserved.
Click here to view the Singapore Budget 2021 publication.