Finance Minister sought to chart Singapore’s emergence from the pandemic through budget
The Singapore Budget 2022 was announced today by Finance Minister Lawrence Wong. The budget, entitled ‘Charting Our New Way Forward Together’, aimed to chart Singapore’s progress beyond the pandemic, included continued support measures for affected industries (such as aviation), measures designed to shore up the country’s finances, such as the GST hike, as well as initiatives to transition to net-zero.
Here are some key takeaways:
Carbon Tax of $25 per tonne to kick in from 2024
In line with Singapore’s net-zero ambitions, a carbon tax of $25 per tonne will kick in in 2024 and 2025, rising to $45 per tonne in 2026 and 2027 and reaching $50 to $80 per tonne by 2030. The current $5 per tonne of emissions will remain unchanged until 2023 with incremental raises being announced in due course. Support will be provided to affected businesses, including a transition framework to help firms with the increase, certain allowances for firms and the ability to offset up to 5% of taxable emissions through high-quality international carbon credits.
Green bonds and internal combustion engine phase out
In addition to increased carbon taxes, Singapore will issue up to $35 billion in green bonds by 2030 and seek to position itself as the go-to location in Asia for expertise in carbon services, the trusted regional marketplace for carbon credits and a front runner in developing sustainable aviation and marine fuels. Furthermore, Singapore is also planning to build more electric charging points closer to homes and phase out internal combustion engine vehicles by 2040, as part of the Singapore Green Plan.
The Finance Minister announced a number of revenue raising initiatives. Singapore will introduce a new tax for Multinational enterprises in line with the global minimum tax rate of 15% for multinational companies. The top marginal personal income tax rate will rise from YA 2024, raising to 23% for those earning in excess of $500,000 to $1million, and income in excess of $1million will be taxed at 24%. There will be no wealth tax, given the various complexities and the mobility of wealthy individuals.
Property tax will be adjusted, increasing for non-owner-occupied residential properties from the current 10%-20%, to 12%-36%. All owner-occupied properties will face higher taxes, with a larger tax for higher-end properties, increasing from 4%-16%, to 6%-32%. Luxury cars will also be taxed at a higher rate.
Singapore will increase GST in two steps, with the first step kicking in on January 1, 2023, with the rate rising from 7% to 8%. The second raise will happen on January 1, 2024, rising to 9%. The revenue will go towards healthcare and senior care.
Support for businesses
$500 million has been set aside to support companies that are still in industries affected by the COVID-19 pandemic, via a Jobs and Business Support Package. Small and medium-sized enterprises (SMEs) who are Eligible will receive $1,000 per local employee, capped at $10,000 per firm. Sectors who will benefit include food and beverage, retail, performing arts and arts education. Operators of sports facilities, cinemas, museums, art galleries, historical sites, indoor playgrounds and other family entertainment centres will also be eligible. The Jobs Growth Incentive scheme will also be extended by six months to September and programs such as the Temporary Bridging Loan Programme (TBLP) and enhanced Trade Loan Scheme will be extended.
Minimum qualifying salary for Employment Pass and S Passes raised
S Pass applicants’ minimum qualifying salary will be raised to $3,000 in September (up from the current $2,500), with the minimum salary for the financial services sector raised to $3,500. Further raises will occur in September 2023, and September 2024 with values announced closer to those dates.
For Employment Pass (EP) applicants, the minimum salary will be raised from $4,500 to $5,000, with the financial services sector raising its minimum salary to $5,500.
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