Measures to help older Singaporeans, such as the S$8 billion Pioneer Generation package, were a big part of Budget 2014.
Factoring that in, along with other measures and the Net Investment Returns Contribution, the Government had projected an overall budget deficit of around $1.2 billion or about 0.3 per cent of the GDP.
However, economists estimate that FY2014 could turn in a budget surplus. United Overseas Bank is forecasting an overall budget surplus of S$390 million. DBS Bank is projecting a surplus at S$1.9 billion, and OCBC Bank at around S$1.3 billion.
“In terms of the fiscal picture, it still looks fairly healthy as far as operating revenue is concerned, because the first nine months of FY2014, we are still running at close to 8 per cent above trend,” said Ms Selena Ling, head of Treasury Research and Strategy at OCBC.
“And that’s thanks really to income taxes being stronger than expected, and of course, GST also being flat to modest growth year-on-year. Nevertheless we still expect operating revenue to come in above what was the FY2014 plan.”
UOB economist Francis Tan said: “Due to pretty strong GDP growth in 2013, that contributed to the income from taxation and corporate taxation in FY 2014. We are thinking that the corporate and income tax – which is the largest still, in terms of share of Government’s total revenue – we are thinking that it actually grew around 4.2 per cent year-on-year. In fact, it could be coming in better than what we saw in 2013, which was a 3.6 per cent gain during that time.”
Economists said the fairly resilient income and corporate earnings growth will support tax revenue collections. And it is expected to offset the drop in revenue from stamp duties. UOB projects that the revenue from stamp duties for FY2014 could fall 33 per cent year-on-year to about S$2.9 billion. That is largely due to the weaker property market which has been affected by a slew of cooling measures and loan curbs.
UOB added that tax revenue from motor vehicles could contract marginally (0.5%) as the decline in motor vehicle sales stabilised. Meanwhile, it estimated that betting taxes collected in 2014 may trend higher at 4.6 per cent, possibly due to the increase in betting duty rates on lotteries from July 2014.
For FY 2015, economists are expecting the government to continue to commit substantial amount of funds for social programmes. They include initiatives like the Skills Future Jubilee Fund to help Singaporeans build skills for the future, as well as the Silver Support Programme to assist needy seniors.
“I think what we will see in this Silver Support scheme is that it will come in similar form as the Pioneer Generation Package which we saw last year. I expect the Government to set aside a sum of about S$10 billion to S$12 billion, where by it will put the sum in this fund for investment, and returns from investments will be used to find this Silver Support Scheme,” said DBS Bank’s senior economist Irvin Seah.
UOB is forecasting a special transfer of S$11 billion for FY2015, while OCBC puts it at around S$12 billion.
DBS is projecting an overall budget deficit of S$1.3 billion for FY2015, but OCBC expects to see a surplus of S$200 million, and UOB a surplus of S$710 million.