So, were you sitting in front of your 42-inch flat screen television with a bag of popcorn to watch the Singapore 2014 Budget speech? *crickets chirping* Hmmm… didn’t think so.
In that case, you’re in luck, because at MoneySmart, we watched the whole budget speech as attentively as if we were watching an episode of Breaking Bad – minus 99% of the entertainment value.
Without further ado, here are the highlights of who benefits and who’s going to suffer that you missed out on during the 2014 Budget speech:
Older Singaporeans Get Much Needed Healthcare Support
The budget speech focused largely on providing greater healthcare assistance to elderly Singaporeans, with special attention being given to the “Pioneer Generation,” or those who were at least 16 years old when Singapore gained independence in 1965, and who gained citizenship by 1987. The government will put $8 billion dollars into a Pioneer Generation “Fund” that will grow with interest to $9 Billion dollars.
Here are some of the highlights when it came to healthcare:
- Pioneer Generation Package:
- All members of the Pioneer Generation will receive an extra 50% subsidy for their Specialist Outpatient treatments and Polyclinic bills.
- Members with a special Medishield
- Medishield Life subsidies will rise from 40% at age 65 to 60% at age 90
- Lower- and Middle-Income Healthcare Assistance:
- Singaporeans who receive Specialist Outpatient treatment will have their bills subsidized by 60% (middle-income) and 70% (lower-income)
- Family members with ageing parents:
- Handicapped parent relief has increased to $3,000
- Subsidies of up to 80% to offset transport expenses
- Elderly Singaporeans not included in the Pioneer Generation Package:
- Medisave top up of up to $200 per year for 5 years if you’re 55 or older
Experience, Innovation, and Incentives Will Boost Singapore’s Economy
“Productivity” was the key word in the budget speech when it came to keeping Singapore’s economy vibrant. The DPM made many mentions of boosting the experience of the workforce, and jumpstarting innovation and efficiency with more incentives for businesses, especially SMEs.
In the budget speech, here were the main areas of focus:
- Boosting Productivity in the Construction Sector:
- With the increase in the foreign worker levy for R2 Work Permit Holders ($600 to $700 in 2016), the DPM encouraged more companies to expand the skills of R2 employees so they could advance to the R1 category.
- The government will become choosier in selling land to developers who use more “efficient” building processes and supplies, such as pre-fabricated materials.
- Boosting Financial Support for SMEs Wanting to Expand or Innovate:
- SMEs can expect the government to subsidize 70% of their Information and communications technology (ICT) products and services costs, such as high-speed internet.
- SMEs can expect the government to subsidize 80% of qualifying costs for innovations that are new to Singapore (capped at $1 million)
- Singapore will extend the Productivity and Innovation Credit (PIC) scheme until 2018.
- The Internalization Finance Scheme, which assists businesses wanting to expand overseas, was doubled to $30 Million.
- Businesses can expect the 50% tax deduction for Research and Development (R&D) expenses to continue until 2024.
Education Bursaries and Financial Assistance Will Increase
Future Singaporeans students from Kindergarten to University will receive further financial assistance and support in many forms.
Here’s what current and future Singaporean students can expect:
- Preschool Students:
- The government will spend an additional $1.5 billion dollars on pre-school education.
- The government will extend the Kindergarten Fee Assistance Scheme to qualifying middle-income families as well.
- If your household income $3,000 or below, you’ll only pay $3 a month for placement in anchor operators and MOE-registered Kindergartens.
- If your household income is $3,000-$4,800, you’ll only pay $85 a month for placement in anchor operators and MOE-registered Kindergartens.
- University Students:
- The Lifelong Learning Endowment Fund will receive an additional $500 million
- Up to 2/3 of Singapore households will be able to qualify for higher education bursaries of up to $2,600 annually
- Those belonging to the lowest 1/3 of Singapore households will see bursaries increase up to $3,600 annually
CPF Contribution Rates Rise
In an effort to increase the retirement/Medisave savings of all Singaporeans, the budget included raising CPF contribution rates up to 1.5%. However, the DPM mentioned that this will be the last CPF increase for the time being.
Here are the CPF increases you can expect:
- 1% increase in the CPF contribution rate for employers to go into every Singaporean’s Medisave account.
- 1.5% increase in CPF contribution rates for Singaporeans aged 50-55 (1% employers, .5% employee)
- 1.5% increase in CPF contribution rate for employers for Singaporeans aged 55-65
Your Vices Get Taxed Further
Where do we even begin with this? The big fat loser in the room, you can hear all the teetotallers having a huge laugh. In an effort to generate more revenue for the initiatives above, the government will further tax the favorite vices of Singaporeans.
So expect prices on the following vices to rise once these taxes go into effect 1 July 2014:
- Excise tax rate on alcohol raised by 25%
- Excise tax rate on tobacco raised by 10%
- Betting duty rates on lotteries raised by 30%
In summary, unless you are a chain-smoking, raging alcoholic who never gets access to duty free liquor, most people should be happy with the new incentives introduced by the government. On the business side, construction companies may have been the ones who ran off to the bar the fastest, with increased foreign worker levies to kick in in 2016. But for SMEs, there’s cheaper broadband!
There was an interesting point raised on unspent budget due to timing and ongoing “projects”. Hmm, what? We’re going to take a look at that in a bit more detail (if it’s even possible) so stay tuned with us on Facebook!
What did you think of the Budget 2014? Do you think these initiatives will go a long way to helping Singapore as a whole? Share your thoughts with us here!