Budget 2017: Here's what to expect on Feb 20
SINGAPORE - Finance Minister Heng Swee Keat will deliver the Budget for 2017 at 3.30pm on Feb 20 in Parliament, laying out the Government's spending priorities over the coming year. It comes at a time of global uncertainty and slow economic growth for Singapore with unemployment on the rise.
Here's what to expect:
1. It will focus on the economy - and address both short-term needs and longer-term goals
Spending on social needs, well covered in previous Budgets, will take a back seat. Prime Minister Lee Hsien Loong has said that this year's Budget will address Singapore's more immediate economic needs, and include measures to implement longer term strategies set out by the Committee for the Future Economy (CFE) last week.
2. Measures to help tide businesses and households over
Measures will likely be finely targeted, such as a temporary deferment or extension of income tax payments or a one-off tax rebate for retrenched workers, particularly hard-hit professionals, managers, and executives.
Do not expect broad income tax cuts or reliefs after the sharp increases in social spending in recent years. Given the anaemic economy, an increase in the goods and services tax and hike in income taxes for those in the top income brackets are also unlikely.
Businesses could receive more tax rebates and subsidies to defray costs or send workers for training. Government landlords may give rental rebates on industrial, commercial and retail properties.
Less likely, given the focus on innovation and productivity, is delaying planned increases in the foreign worker levy.
Also, with more businesses struggling to get financing, the Government may enhance the existing Working Capital Loan by raising the loan cap beyond $300,000 and increasing the risk quantum co-shared - currently at 50 per cent - by the government. The scheme to help local enterprises access unsecured working capital loans was introduced in Budget 2016.
3. Measures to encourage workers to continually deepen and refresh their skills
The growing skills and jobs mismatch in the economy, means more measures to help Singaporeans acquire new and deeper skills to stay relevant in the face of rapid technological change.
The Government already moved this week to create a national, online one-stop education, training and career guidance portal by merging the Jobs Bank with the SkillsFuture Individual Learning Portfolio. This will help students, workers and employers to match changing jobs with the skills set needed.
We may see improvements to the SkillsFuture schemes, like increasing the credit amount of $500 as meaningful courses could cost more, and improving the variety and quality of courses.
The Government has already announced that more modular courses will be rolled out with a greater push for more workplace and online learning opportunities.
4. Measures to encourage R&D, innovation and scaling up
In Budget 2016, the government introduced the Automation Support Package, giving grants, more tax allowances and enhanced financing support for projects undertaken by businesses to automate and scale up. It committed $400 million over the course of three years.
This year, we may see bigger grants and higher risk-sharing by the Government to help companies invest in digital technologies, advanced manufacturing and robotics.
The scheme may also be broadened to apply to "innovative activities" that lead to the creation of new products or services. A good example is Uber, which offers new value for customers by combining existing technologies like global positioning system and online payment systems .
5. Measures to encourage businesses to go international
These will target "high-growth" companies with the potential to compete and scale up.
The Government this week announced new initiatives to boost financing options for such growth companies and build the technology infrastructure to drive innovation. It will look into the use of dual-class share structures to attract and support the growth of high-tech companies, and the creation of a private-market platform for innovative companies to raise capital from investors.
For Budget 2017, companies may also get more grants or tax incentives to access the global network. These could include a special tax deduction on interest or related borrowing costs incurred to acquire or set up overseas investments. Tax deductions could also be targeted at small and medium enterprises to encourage them to expand abroad.
6. More support targeted at people with disabilities, the elderly and young families
The Government has said that Singaporeans with disabilities can expect a helping hand from this year's Budget, along with the elderly and young families.
The help for people with disabilities is likely to focus on their education, employment and integration into society.
With job security and the high cost of living deterring Singaporeans from starting families or having more kids, expect some incentives here.
Rather than adding to the already generous Baby Bonus scheme, these could take the form of incentives to get employers to provide flexible work arrangements to young parents.
7. Spending on infrastructure to remain strong
The Government sees spending on infrastructure as critically important in keeping Singapore globally connected and competitive.
Key projects include the upcoming port in Tuas, the Kuala Lumpur-Singapore High Speed Rail and Changi Airport Terminal 5.
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