After the unprecedented pandemic and the massive spending measures in 2020, Deputy Prime Minister Heng Swee Keat reminded that the government's core values remained "prudence" and "stewardship".
The Emerging Stronger Together Budget is expansionary, and will run an estimated deficit of S$11 billion.
The multiple layers of support implemented to help Singaporeans mitigate the impact of Covid-19 actually resulted in a Gini coefficient of a record low, after taxes and transfers. This measures a country's income inequality.
Spending will go up
However, Heng, who is also Finance Minister, made it clear in his wrap-up speech on Feb. 26 that there are many calls on the public purse, which requires concurrent fiscal measures to rebuild Singapore's reserves.
He mentioned two familiar concerns, a rise in healthcare spending of 30 per cent by 2030, and subsidies to keep housing affordable for families.
The Budget also included measures to raise revenue and offset spending. "We have to be upfront. If we want to spend more, we have to raise revenue," Heng said.
GST hike can't be delayed, but will be managed
For example, Heng announced in his earlier speech that the hike in Goods and Services Tax (GST) could not be delayed further beyond 2025, and it could come as soon as 2022.
Heng also announced the imposition of GST on goods purchased from overseas, which will kick in from Jan. 1, 2023. He added in his Feb. 26 speech that GST has not been raised since 2007, remaining unchanged at seven per cent.
Heng noted that MPs are concerned about the impact of the hike on Singaporeans, and he shares those concerns. However, the government is taking steps to help manage this.
The S$6 billion Assurance Package will help to delay the impact of the GST hike for "at least five years", for a majority of Singapore households. Lower-income Singaporeans will receive higher offsets of about 10 years’ worth of additional GST expenses incurred.
This package is on top of existing schemes, like the GST Vouchers.
Support for drivers after hike in petrol duties
Heng also referred to his immediate hike in petrol duties, which was made in the context of environmental measures, but also does add to the government's coffers.
Heng emphasised that the duties collected in 2021 will "almost all" be channelled back to owners of petrol vehicles in offsets.
The government will also take steps to support those who drive for a living, with additional petrol duty rebates on top of road tax rebates.
"Taken together, the support will cover the increase in petrol duty for a year for motorcycles and taxis," Heng said.
The government has been working with tripartite partners on the details of rebates for taxi and private hire drivers.
Taxi operators and Grab Rentals have agreed to pass on the road tax rebates to their drivers. Gojek will also introduce additional incentive rebates for their drivers.
"With this, their drivers will receive rebates starting from March," said Heng. "Motorcycle owners will receive their additional Petrol Duty Rebates from May."
Taxi and private car hire drivers also benefited from Covid-19 relief measures, such as the Covid-19 driver relief fund.
Aside from such bread-and-butter issues, Heng reiterated that his Budget positions Singapore to be prepared for the future, while ensuring that Singaporeans can be assured of having a home, world-class education, healthcare, and a sound retirement for seniors.
"At the end of the day, our success is not measured in terms of GDP, but in (the) society and community we build together," he said.
Top image from MCI's YouTube channel.