By Xinghui Kok and Chen Lin
SINGAPORE (Reuters) – Singapore on Tuesday announced a reduction in the fiscal deficit in its budget, aimed at helping families cope with rising living costs while supplementing its Resource coffers depleted by the pandemic.
The fiscal position is “suitable for the projected economic situation this year”, Treasurer Lawrence Wong told the Parliamentary Budget as he presented the details of 2021.
Joshua Wong, who is also deputy prime minister, said the government’s revenue was higher than expected last year, reducing the deficit to S$2 billion ($1). 15 billion) 2021 fiscal year instead of the original estimated S$3 billion deficit, or 0.5% of GDP .
For 2023, the projected shortfall is S$400 million, or 0.1% of GDP.
The tax changes announced by Wong will affect higher income Singaporeans and large corporations, but also provide more support for lower income households, top up tance funds for Medicaid and support to offset sales tax hikes plan. A range of benefits for low-income earners, working mothers and retirees through various improvements,” said Ajay Kumar Sanganeria, Partner, KPMG Singapore.
Singapore’s trade-dependent economy faces slowing global growth this year , inflation and rising interest rates headwinds. At the same time, spending is rising as the aging population drives up healthcare costs.
Valued at S$1.5 million to S$3 million from Wednesday Buyers of residential properties above S$3 million will be taxed at 5%, while those purchasing properties above S$3 million will be taxed at 6%. The current Buyer’s Stamp Duty rate is 4%.
Wong also unveiled “more progressive” car taxes, affecting the top third of car buyers, which would generate S$2021 hundred million dollars in additional income per year.
“Our system is based on collective responsibility,” he said. “Everyone contributes something, but those who are rich contribute more. “
This is on top of last year’s fiscal policy changes, which have increased tax purchases on income, property and luxury cars for wealthier Singaporeans.
The city-state also intends to implement a domestic supplementary tax, taxing large corporations % passed by 2025. This is To meet Pillar 2 of the OECD Base Erosion and Profit Shifting (BEPS) 2.0 framework.
Wong said the global development of BEPS 2.0 is fickle and Singapore will monitor it. Wong “If there are additional delays, we will adjust our implementation timetable. “
Government will help citizens and businesses cope with cost pressures.
Government will step up support package to help Singapore people to offset the recent S$6.6 billion (US$4) sales tax hike.15 billion) to S$9.6 billion.. up from 7% on Jan 1 this year The sales tax will be raised to 9% in January next year, following the increase from the current 8%.
Wong said this would offset all the expenses low-income households face due to inflation and sales tax hikes growth while “substantially covering” the spending growth of middle-income households.
Maybank analyst Chua Hak Bin said, “Budget FY2023 is planned around a balanced budget.
“Budget has more fiscal space compared to last year’s budget FY2023 Allows for more top-ups of endowment funds and trusts for medium-term goals Fund, last year’s budget was more constrained due to COVID relief measures.”
Singapore 2023 core inflation forecast at 3.5%-4.5%, Headline inflation is expected to be 5.5%–6.5%.
For 2021 as a whole, core inflation averaged 4.1%, higher than 2021 0.9% of records. Meanwhile, headline inflation was 6.1% last year, up from 2021’s 2.3%.
(1 USD=1. 3271 SGD)