Friday, 27 February 2015

Singapore BUDGET 2015 thoughts

Generous Budget

It’s been a few days since the unveiling of Budget 2015. Some have coined it a Robin Hood budget, and you can see why, at least as far as taking from the rich is concerned. Let’s face it, with the general public expectation that it would be an election budget, not many were expecting a tax hike for the top personal income tax rates. It’s a bold move, and top earners will be a trifle upset, but frankly speaking, I’m sure they’ll manage. They are top earners for a reason.

Nevertheless, the Budget 2015 is the most generous spending Budget by the Government since the economic crisis. A planned deficit of $6.7 billion is quite an eye-opener. In any case, the lower income groups definitely stand to benefit. The 50% personal income tax rebate (capped at $1,000) should have quite an impact for them, and the increase in GST Vouchers will also come in handy.

I’ve always been a fan of the various programmes the Government implements to take care of its senior citizens. The additional Special Employment Credit, the increase in the CPF contribution rates and the additional interest on CPF balances from age 55 onwards, and are all to be appreciated, although some have argued that the last one should have been done ages ago. The Silver Support Scheme is a targeted subsidy scheme that will be welcomed nationwide, as long as the mechanisms are in place to ensure it goes to those that rightly qualify.

SkillsFuture, the latest buzzword

The SkillsFuture initiative is a great way to get more Singaporeans on board with the idea that learning is a lifelong process, that you can still pick up new skills later in life that will motivate you to excel in what they do, instead of being valued only on your initial academic credentials. It’s a very ambitious plan though, one that includes everything from the $500 credit for Singaporeans > 25 yrs old, subsidising 90% training costs for Singaporeans >40 yrs old, the creation of fellowships, developing a pool of mentors, and the implementation of new modes of learning. Administration is key, and quality should NOT be compromised if this is to be of benefit for each Singaporean and the country as a whole.

The push for globalisation

As usual, we also have the ongoing economic restructuring, productivity initiatives, additional financing options, continuous support for innovation and the drive to globalisation of local companies. With regards to the globalisation drive, the three measures announced could go a long way to pushing companies to venture overseas, particularly the enhancement of the Double Tax Deduction for Internationalisation scheme to now cover salaries incurred for Singaporeans posted overseas.

Of course, some believe that a hike in the GST is not far away, it just seemed unlikely it would be this year in light of the upcoming elections. However, most expect that to become reality in the near future. The need for widening Singapore’s tax base is there, and more is needed to support the country’s ongoing development.

Election budget? Not really....

All in all, I wouldn’t call Budget 2015 an election budget. The goodies are there, but hardly anything feels like a free lunch. All the best to the citizens and the country as a whole, hoping for a prosperous and productive 2015!

p.s.: Sorry prospective parents, no real impact this year for you! 

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