Finance Minister Heng Swee Keat’s Budget 2018 speech yesterday was a 120-minute oratorical epic which touched on just about every nation-building issue, from the ageing population to sustainability.
But if you missed it and are now confused by your WhatsApp chain messages, here’s our quick guide to Budget 2018 – the key announcements that will affect everyday Singaporeans:
Budget 2018 Summary
|You’ll save on…||SG Bonus hongbao||$100 / $200 / $300||End-2018|
|Proximity Housing Grant enhancements||$10,000 to $30,000||In effect|
|U-Save increase||Additional $20 per year||2019 to 2021|
|You’ll spend more on…||GST overall||9% (increased from 7%)||2021 to 2025|
|GST on online services||7% (new!)||1 Jan 2020|
|Tobacco||Additional 10% tax||In effect|
|BSD for >$1mil properties||4% (increased from 3%)||In effect|
|Maid levy for non-concessionary employers||$300 / $450 (increased from $265)||1 Apr 2019|
|Carbon tax||$13.70 (estimated) annual increase on utilities||2019 onwards|
1. $100 to $300 SG Bonus (end-2018)
Let’s start with the good news. All Singaporean adults (age 21 and up) will get a one-off “SG Bonus hongbao” from the Government at the end of 2018.
The amount varies according to your annual income, as follows:
|Annual income||SG Bonus amount|
|$28,000 & below||$300|
|$28,001 to $100,000||$200|
|$100,000 & above OR own more than one property||$100|
But before you rush out and spend it all, read on to find out how upcoming changes will chip away at your hongbao in the near future…
2. GST will increase to 9% (2021 to 2025)
Yup, it’s official – GST will go up from 7% to 9% sometime during the next couple of years.
This shouldn’t surprise anyone as it’s been over 10 years since the last GST hike, and everyone has been talking about it… but still, 2 whole percentage points!
Although we’ve been given a vague implementation date – sometime between 2021 and 2025 – Heng Swee Keat hinted during his speech that it’ll probably be closer to 2021.
The GST hike, when it takes place, will be accompanied by a GST Voucher scheme, exact amount unknown, to ease the pain of lower-income Singaporeans.
3. GST on online services (from 1 Jan 2020)
“Still got 3 or 4 more years until GST hike, so now can relax right?”
Nope, because in less than 2 years’ time, there will be GST on digital services by major providers.
That means Spotify and Netflix subscriptions, App Store purchases, Amazon e-books, Steam games and Overwatch loot boxes… basically everything that makes life worth living.
Even freelancers and companies might be affected, if GST applies to software companies like Microsoft, Adobe and Slack.
The one consolation we can get is that GST rules for goods (i.e. online shopping) remains unchanged for now. We can still make purchases of up to $400 without incurring GST. But I wouldn’t count on that holding forever.
4. Tobacco tax increased by 10% (from 19 Feb 2018)
Here’s another reason to stick to your new year’s resolution to quit smoking, because cigarettes just got a whole lot more expensive – thanks to a 10% jump in excise duty.
And no, you can’t stock up on cigarettes because the increase was immediately effective on the day of the Budget announcement.
OK, so practically everything is going to get more expensive in the next few years, but hey, at least resale flats should be more affordable with the new and improved Proximity Housing Grant.
Here’s a look at how much you can now get:
|Couples / families||Live WITH parents||$30,000 (increased from $20,000)|
|Live NEAR parents – within 4km (increased from 2km)||$20,000 (no change)|
|Singles aged 35 and up||Live WITH parents||$15,000 (increased from $10,000)|
|Live NEAR parents – within 4km (increased from 2km)||$10,000 (new!)|
The grant also works the other way – for example, your parents can get a $20,000 PHG if they buy a resale flat near you and your spouse’s BTO.
Personally, I’m excited about the increased distance for what counts as “near” which doubled from 2km to 4km. That’s a whole lot more options than before, especially if your parents stay near the seaside or next to a nature reserve.
As far as one can glean from the HDB website, Proximity Housing Grant is open to all eligible resale flat buyers and is not restricted or tiered by income. It doesn’t even matter if your parents (or children) live in private property – you’ll still be eligible.
6. Buyer’s Stamp Duty increased to 4% for >$1mil properties (from 20 Feb 2018)
On the other hand, if you were thinking of upgrading to a condo this year, you might want to rethink your decision as Buyer’s Stamp Duty (BSD) will now be 4% (up from 3%) on residential properties above $1 million.
So if you’re eyeing a $1.2 million apartment, you now have to fork out $48,000 for BSD – hardly a sum to be sniffed at.
Correction: 4% applies only to the highest tier of BSD, i.e. any part of the purchase price above $1mil.
For a $1.2 million apartment, you’ll have to pay 4% (previously 3%) on the final $200,000. Total BSD will now be $32,600 – a relatively small increase from $30,600 previously.
However, the more your property exceeds the $1mil mark, the more you’ll feel the pinch. A $6 million property, for example, will cost you $50,000 more in taxes than before.
7. Maid levy increased for non-concessionary employers (from 1 Apr 2019)
Some employers will have to pay higher levies for hiring foreign domestic helpers from next year onwards. The new monthly levy will be $300 (up from $265) for the first maid and $450 (up from $265) for the second.
Most people who employ maids, however, will be unscathed by the levy hike. If you already enjoy the concessionary levy of $60 a month, the levy remains the same.
Concessionary households are those that fulfill at least one of the following conditions:
- Children below 16 years old
- Seniors aged from 67 years old (note: increased from 65 years old)
- Persons with disabilities
|Type of household||Condition||New monthly levy|
|Concessionary (children, seniors, persons with disabilities)||1 domestic helper per eligible person – maximum 2 helpers per household||$60 (no change)|
|Non-concessionary (all others)||1st domestic helper||$300 (increased from $265)|
|2nd domestic helper||$450 (increased from $265)|
8. New carbon tax & increased U-Save (from 2019)
It’s mostly big power and petrochemical companies that will feel the pinch, but a small amount may trickle down to Singaporean households – an estimated annual $13.70 increase in electricity and gas bills.
To mitigate the impact on your utility bills, each household will get $20 more in Utilities-Save (U-Save) each year from 2019 to 2021.
From 2023 onwards, carbon tax will be reviewed and start going up to somewhere between $10 and $15 per tonne by 2030.
We don’t know how much consumers will be affected, but it’s likely that the costs to the average Singaporeans will be kept minimal because this tax is meant to deter large companies that are responsible for the bulk of emissions.
What are your thoughts on Budget 2018? Share them with us here!
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