Likely Outcomes of Singapore Tax Budget 2019
Leading accounting organization Deloitte does not foresee any major changes to the strategies implemented by the Singaporean government in 2017. These strategies were put in place by the Committee of the Future Economy. According to Deloitte, this is the case because Singapore’s domestic economic concerns are dominated by healthcare and the question of how to handle its aging population. The financial impact of an aging population is most likely to be felt with regard to income tax collection, healthcare spending, and welfare spending. Income tax collection is expected to increase significantly because the Singaporean government took the fact that an older population would have generally accumulated more personal income over the years into consideration. Healthcare and welfare spending would also increase because as people age, they often become more susceptible to health problems while also becoming less able to support themselves. How we can help you on Tax planning Budget 2019?
With regard to international tax developments, Singapore’s budget is likely to see it utilize a more cautious approach. The approach which is most likely to be taken by Singapore is one of observing, connecting, and influencing so as to adequately play its role in shaping global tax policy. This is because of the OECD’s new BEPS project, which has brought about many notable tax reforms around the world. This project has caused various countries to attempt to claim benefits associated with BEPS.
During a pre-Budget discussion held on January 9, 2019 which was organized by the Institute of Singapore Chartered Accountants, the panellists mentioned that the government needs to do more to help small and medium enterprises (SMEs) benefit from the government’s industry transformation maps (ITMs). ITMs were introduced in Budget 2016 as a way to transform Singapore’s industrial sector. ITMs were progressively rolled out, with the last of them having been released in March 2018. However, many SMEs in Singapore are still unsure about how to reap the most benefits from ITMs. Thus, there is a possibility that Budget 2019 may see some modification of ITMs and how they work.
This same discussion also raised the point that the five-year limit that developers have to sell all units at their residential projects should be reconsidered. Developers are currently subject to a non-remissible 5% Additional Buyer’s Stamp Duty (ABSD) upon purchase of properties intended to be redeveloped. The remissible ABSD is 25% and can only be waived if all the units in the new development are sold within the immediate five-year period following the purchase. Many developers have expressed their concern regarding this current ruling. Their main hope is that more significant and costly projects will be given a longer period. Hence, with this in mind, the Singaporean government might make it a point to be addressed during Budget 2019.
There have also been some calls for the income threshold for personal income tax to be raised. Proponents of such a move believe that it would be of significant benefit to Singapore’s middle class. Professional services network PricewaterhouseCoopers backed this raise before Budget 2018, but its wish was not fulfilled as the income threshold remained at S$20,000. Security issues have also been an issue of concern, and the Singaporean government has responded. The government plans to monitor public areas such as neighborhood centres and hawker centres by installing cameras in the areas.
Singapore Tax Budget 2019 and Singaporean Politics
Budget 2019 may also have notable political implications. Many observers believe that the budget will offer indications on when the next round of general elections will be held. If elections were to be held in 2019, the government is likely to come forth with a budget loaded with “gifts” for the citizens in an attempt to consolidate the power of the ruling People’s Action Party (PAP). Political observer Eugene Tan also noted that even if elections are not held in 2019, the government could use the budget to tip public opinion in favour of the PAP. There are also two issues which are of concern to both the election and Budget 2019: cost of living and the rise in income inequality. In fact, polls recently conducted across Singapore showed that the issue that concerns the average Singaporean the most is cost of living, an issue of which Singaporeans claim to be less satisfied with now than in previous years.
One other question about Budget 2019 which will weigh on the minds of many is what the overarching theme of the budget will be. For example, Budget 2009 was about taking steps to deal with the ongoing global recession, while Budget 2006 dealt with upgrading and restructuring the Singaporean economy. The pre-Budget feedback exercise mentioned earlier may shed light on areas that the Singaporean government plans to emphasize, as it was centered around five topics related to the budget. These topics were healthcare for the elderly, spending on pre-school programmes, innovation for firms, security and external relations, and philanthropy and volunteerism.
Budget 2019 will be pivotal for the Singaporean economy. Because of the current economic conditions, a well-planned, carefully-constructed budget will be necessary to ensure that Singapore retains the high level of financial stability it has historically had. It will be interesting to see who in Singapore stands to gain the most from Budget 2019 and in what ways.