S'pore's Budget surplus derived from COE premiums, personal income tax & state investment returns

Singapore's fiscal surplus for financial year 2024 amounted to S$6.4 billion, or 0.9 per cent of gross domestic product (GDP), which is larger than the S$0.8 billion surplus previously estimated.

The figures have been parsed and reported by Bloomberg.

As surpluses earned in one term of government cannot be carried over to a new term of government, Budget 2025 saw a slew of government transfer announcements.

COEs (Vehicle quota premiums)

The Singapore government collected S$6.54 billion from the certificate of entitlement (COE) auctions in fiscal year 2024, which is S$1.82 billion or 38.5 per cent higher than the estimated figure.

This revenue, derived from the increases in vehicle quota levels and near-record high prices, drove budget into a surplus last year, which was also boosted by income tax and contributions from the state wealth funds.

The figures are according to budget data released on Feb. 18.

For the fiscal year of 2025, Singapore is also expecting a surplus of S$6.81 billion, a surprising outcome given that economists have expected a 0.3 per cent of GDP deficit, as the government has pledged giveaways via vouchers ahead of a national election, Bloomberg reported.

The Ministry of Finance (MOF) has recorded more from this avenue of COE auctions than originally expected from three of the past five fiscal years, according to a review of prior budgets by Bloomberg.

Against this backdrop, the government has pledged to up the number of COEs, and estimated that vehicle quota premium revenues will hit a record of S$6.6 billion in fiscal 2025.

COEs for larger cars are hovering around S$110,000 at the moment.

State funds

In fiscal year 2024, the Singapore government got S$24 billion from Net Investment Returns Contribution (NIRC).

This was about S$520 million more than estimated a year earlier.

And it is estimated to increase further with a forecast increase of 13 per cent to S$27.1 billion for the current 2025 fiscal year.

NIRC represents as much as half of the net investment income and up to half of the long term expected real returns of Temasek, GIC and the Monetary Authority of Singapore.

Personal income tax

Personal income tax collected grew by 8.3 per cent from a year ago to almost hit S$19 billion.

Likewise, corporate income tax rose 10.2 per cent above expectations to hit S$30.9 billion in fiscal 2024, higher than the S$28 billion estimate.

MOF said this was mainly due to stronger growth in the finance and insurance and wholesale trade sectors in 2023.

Singapore had also hiked its goods and services tax to 9 per cent in 2024 to help boost revenue, which brought in S$20.6 billion, higher than the S$19.4 billion that was expected.

Top photo via Unsplash