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Singapore Budget 2015: 7 Reasons Why Robin Hood Budget Matters

I tried frantically to keep up with noting down the giveaways as Finance Minister Tharman Shanmugaratnam reeled them off as he announced the Budget 2015.

A new SkillsFuture Credit account for all Singaporean workers aged 25 and above. Top ups to the accounts of children, secondary school students and post-secondary school students. Higher GST vouchers across the board, with a special bonus for seniors.

There were too many to list. I gave up and just listened.

And minutes after Mr Tharman finished the Budget 2015 statement, the first SMS came, from a former colleague.

A Robin Hood Budget, she said.

Here are seven noteworthy things about this year’s Budget.

1. Robin Hood qualities

It takes from the very rich to give to those who are poorer. Without little fanfare but every determination, the Government raised the top marginal tax rate for personal income taxes from 20 to 22 per cent. It will raise $400 million in extra revenue when it kicks in the Year of Assesssment 2017.

It gives a lot to the poor, especially seniors from lower-income jobs in the past, under a new Silver Support bonus that aims to give up to about $750 a quarter a person to the elderly.

2. The 1 per cent gap

Mr Tharman flagged this gap. No, I’m not talking about the much-touted gap between the top 1 per cent earners and the rest, which has gotten so much flak worldwide for fostering inequality.

I’m talking about the 1 percentage point projected gap between long-term revenues and long-term spending. The latter is tipped to go up to 19 to 19.5 per cent of GDP from now, as Singapore opens its coffers to spend on health care, retirees, and on infrastructure and investment in education. The former hovers around 18 to 18.5 per cent of GDP.

How to make up the shortfall of about 1 per cent of GDP?

This is a structural issue that will have resonance beyond this Budget.

3. New spending rule

Mr Tharman has a way to close that 1 per cent gap: Use projected long-term returns from Temasek Holdings.

The Net Investment Return formula framework was implemented in 2009. He said: “Under the framework, the Government is allowed to spend up to 50 per cent of the expected long term real returns on its net assets managed by MAS and GIC.”

Temasek was left out as it was undergoing a major change in investment strategy. Mr Tharman said it was a good time to add Temsek to the mix.

So this Budget is important for signalling the long-term gap in revenue and spending.

It is also significant for using a new framework that allows Singapore to tap a wider pool of money from expected investment returns on its reserves into the future.

“The move will bolster our fiscal resources at a time when we have to fund long-term critical infrastructure and develop the human talent and capabilities to secure our future.”

4. More help for middle-income

Actually, I should qualify the Robin Hood bit. This Budget takes from the rich, to give a lot more to the middle-income, not just the poor.

A 50 per cent personal income tax rebate, capped at $1,000, will benefit mid-income earners most.

The concessionary maid levy is halved to $60. Exam fees are waived for most school students. Child-care subsidies will be improved. Most parents with kids will get fairly large top-ups to the child’s education account, of about $500 per child, regardless of whether the child is in preschool, secondary school or tertiary education.

5. New way of targeting subsidies

A new method to figure out who gets more subsidies and government assistance will be introduced for the Silver Support bonus for retirees. It goes beyond the traditional use of housing type. The Silver Support will still use housing type as a proxy for wealth, giving those in smaller flat types more in the Silver Support bonus. But even those in larger flats, up to five-roomers, will get it.

But it will also take into account past working income of the retiree. It will also look at their household income to gauge what level of support these retirees have.

As the Silver Support kicks in only from the first quarter of 2016 – in just over a year’s time – it isn’t clear how this new system will work out.

But it is a novel, and potentially very useful, way of targeting subsidies. It will also be automatic, using presumably income data from Iras and CPF, and household type data from HDB.

With Singapore going well-down the path of more middle-class welfare subsidies, expect this to be the start of a more refined way of figuring out who deserves what grants and subsidies.

6. Meritocracy of skills, not hierarchy of grades

Mr Tharman and other government ministers have been saying for several years now that Singapore has to go beyond a system where people are valued for their academic credentials, to one where every worker is motivated to excel at what he or she does, and rewarded accordingly.

This Budget puts substance to that dream, with a new SkillsFuture Credit account for every Singaporean aged 25 and above. The Government will give $500 into this account in 2016.

There will be a concerted push to get Singaporean workers and employers to change our culture to one which values people for skills, not their paper qualifications.

A range of new SkillsFuture Awards and Fellowships will be introduced. Think of these as the skills-equivalent of the Public Service Commission’s scholarships for academically bright students.

7. Productivity 2.0

The first round of measures yielded some good results.

Mr Tharman said: “Productivity today is 13 per cent higher than at the start of our restructuring journey in 2009. This is an average growth rate of 2.5 per cent per year. All of this gain was achieved in 2010 (11.6 per cent) and 2011 (2.3 per cent) as we recovered from the recession, and growth has been negligible in the three years since then.”

Next: consolidating measures to focus on innovation and internationalisation. More grants for innovation. Tax breaks for mergers and acquisitions go up to encourage companies to merge and consolidate. The National Research Fund gets a $1 billion boost.

All in, it can be said to be a sensible yet generous Budget, albeit at the expense of the very high-income. It may disappoint those who wanted a big SG50 Bonus to celebrate the nation’s Jubilee. But it does give out a mass hongbao to all Singaporeans, via top-ups to education funds for children and students, and via the new $500 SkillsFuture Credit for workers.

More importantly, it sets Singapore on a clear trajectory – Mr Tharman would call it the path of progressivity – but basically the writing’s on the wall: higher taxes on the rather rich, to give to the poor and the middle-income.

Chua Mui Hoong, Opinion Editor

Source: www.straitstimes.com

February 24, 2015
Singapore Budget 2015 – Winners And Losers

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam delivered his speech on Budget 2015 on Monday, and there were few surprises.

As expected, he talked about the Silver Support scheme for the low-income elderly, the enhancements to the Central Provident Fund System, handouts in the form of GST vouchers, and more help for SMEs.

Perhaps the biggest surprise was the higher personal income tax rate for top earners.

Here’s a round-up of the key announcements based on the “winners” and “losers”:

Biggest loser: High-income earners

Singapore’s top 5 percent, those who earn at least $160,000, will pay higher personal income tax.

“I will raise the top marginal rate by two percentage points, from 20 per cent to 22 per cent, for the highest income earners, with a chargeable income above $320,000. I will also make smaller adjustments that will raise income tax for the others in the top 5 per cent,” he said.

The higher tax rates will apply starting with income earned in 2016 and on taxes to be paid in 2017. It is expected to raise additional revenue of $400 million a year when it comes into effect.

Loser: Businesses relying on Transition Support Package

Tharman announced that the Wage Credit Scheme will be extended for 2016 and 2017, but level of co-funding will be reduced. He will also extend the CIT rebate for years of assessment 2016 and 2017 at the same rate of 30 per cent of tax payable but up to a lower cap of $20,000 per year of assessment. He will let the Productivity and Innovation Credit (PIC) Bonus expire.

The three schemes make up the Transition Support Package, which is estimated to disburse $7.6 billion over three years.

Loser: Car owners

Tharman announced higher petrol duty rates effective the same day as his speech. The duty rates for premium grade petrol will be increased by $0.20 per litre and internmediate grade petrol by $0.15 per litre.

Tharman noted that petrol duty rates have remained unchanged since 2003, and that with alling oil prices, pump prices after the petrol duty changes would remain lower than the level in the last two years.

Winner: Middle-income households

To help middle-income taxpayers, Tharman announced a personal income tax rebate of 50 per cent, setting the cap at $1,000. It will apply for year of assessment of 2015 (for income earner in 2014).

1.5 million individuals are expected to benefit from the tax rebate, which will cost the government $717 million.

Also, to support middle-income families, the foreign domestic worker concessionary levy will be reduced from $120 per month to $60 per month and extended to households with children aged below 16 from below 12.

Winner: Lower-income households

The quantum for the GST Voucher will be increased by $50 in cash across the board from 2015 onwards. It is expected to benefit 1.4 million Singaporeans.

Winner: CPF members

As proposed by the NTUC and CPF Advisory panel, the government will increase the CPF salary ceiling from $5,000 to $6,000. It is expected to benefit at least 544,000 CPF members.

The contribution rates for workers aged 50 to 55 will be restored to the same level as those for younger workers. Thus, the contribution rates for these workers will go up by two percentage points in 2016 (1 percentage point each from employer and employee).

For workers aged 55 to 60, the rate will go up by 1 percentage point from employers, and for workers aged 60 to 65, it will go up by 0.5 percentage points from employers.

To make the CPF system more progressive, an additional 1 per cent extra interest will be paid on the first $30,000 of CPF balances from age of 55. The change will take effect from the start of next year.

Winner: Low-income elderly

The Silver Support Scheme will be a new feature of Singapore’s social security system, said Tharman.

“It is a permanent scheme for both today’s seniors and those in the future,” he said.

Silver Support will be paid quarterly, similar to Workfare. It will provide a supplement of $300 to $750 every quarter for eligible seniors. The average recipient will get $600 per quarter. All the seniors who qualify will receive the supplements for life, as long as they remain eligible.

The scheme is aimed to support the bottom 20 per cent of Singaporeans aged 65 and above. The assessment will be done automatically, so there will be no need for application. It is estimated to cost about $350 million in the first full year. The Ministry of Manpower is expected to implement it around the first quarter of 2016.

Aside from the scheme, Tharman also said seniors aged 55 and above will get a GST seniors’ bonus in 2015 to help with their daily expenses. It will effectively double the GSTV cash component that they usually receive.

Also, those aged 65 and above and living in HDB flats will get an additional $300 this year.

Winner: Skills upgraders

Tharman announced a SkillsFuture Credit in which each Singaporean 25 years old and above will receive an initial credit of $500 from 2016. Further top-ups will be made at regular intervals. The credits can be used for education and training.

Education and training subsidies for all Singaporeans aged 40 and above will be enhanced to a minimum of 90 per cent of training costs for courses funded by the Ministry of Education and the Workforce Development Agency.

The subsidies will be significant, Tharman pointed out. For example, for a part-time undergraduate course such as a Bachelor of Engineering, the total fees payable by a student will be reduced by 60 per cent, from about $17,000 to $6,800.

Tharman also introduced the SkilsFuture Study Awards and the SkillsFuture Fellowships to develop deep skills and mastery in the growth clusters of the future, as well as the SkillsFuture Leadership Development initiative to encourage companies to groom Singaporeans in leadership roles.

Winner: Families with children

Tharman announced the introduction of a new partner operator (POP) scheme to complement the anchor operator scheme. Parents will benefit from lower fees than these centres currenly charged, Tharman said.

He also said the government will top up the Child Development Accounts of every Singaporean child aged six and below in 2015. Those currently without CDAs can open accounts and receive the top-up. The majority of children will receive $600, he said.

Also, fees for national examinations for Singaporean students in government-funded schools will be waived, saving families and students up to $900 from primary school to pre-university.

Government will also provide a $150 top-up to the Edusave Accounts of Singaporeans students aged 7 to 16 on top of the annual contribution of up to $240. Students above the age of 16 who are still in secondary school will also get the top-up.

Tharman also said the MOE Financial Assistance Scheme will be enhanced and a transport subsidy will cover at least half of students’ transport costs.

Annual grants for school-based financial assistance will also be increased.

Post-Secondary Education Account (PSEA) of Singaporeans aged 17 to 20 will also get a top-up. The majority will receive $500.

Winner: SMEs, start-ups, businesses in expansion mode

Tharman said he would top up the National Research Fund by $1 billion this year to encourage firms to invest in research and development.

To reduce early-stage funding gaps for start-ups, the government will increase the co-investment cap for SPRING’s Startup Enterprise Development Scheme (SEEDS) and Business Angel Scheme.

The government will also pilot a venture debt risk-sharing programme with selected financial institutions to provide high growth companies with an alternative to equity financing and traditional bank loans.

It will also raise the support level for SMEs for all activities under IE Singapore’s grant schemes from 50 per cent to 70 per cent for three years. It is expected to benefit about 700 projects.

For companies venturing overseas, Tharman said he will enhance the Double Tax Deduction for the Internationalisation scheme to cover salaries incurred for Singaporeans posted overseas.

Tharman also introduced a new tax incentive, the International Growth Scheme (IGS), to provide support to meet the needs of larger Singaporean companies in their internationalization efforts. Qualifying companies will enjoy a 10 per cent concessionary tax rate on their incremental income from qualifying activities.

The tax allowance for acquisitions costs will also be increased from 5 per cent to 25 per cent of the value of acquisition. Companies will also be able to claim M&A benefits for acquisitions resulting in at least 20 per cent shareholding in the target company, down from 50 per cent.

Source: https://sg.finance.yahoo.com

February 24, 2015
I’m Willing To Convert To Be With My Malay Muslim Gay Partner

I’m a chinese and i met a guy whom i really like. He is a malay. We liked each other and we always enjoy each other’s company a lot. He is a nice guy, someone i can get along well and he knows how to make me happy. However, we had a complicated issue that makes us difficult to be together. It was religion. Because of that, he decided to let us go and he stopped himself from falling in love with me. He like me but yet to fall for me. He said it is hard for us to be together and he wouldnt let himself to love me.

At that point of time, i really do not want any religion commitment and he knows about that. However after losing him, i thought about it and realised i am willing to convert to islam for him. I don’t mind doing it for him. But i dont think this is good because religion is very important and i am supposed to convert for myself, not for anyone.

The problem is.. i havent had the chance to tell him about the fact that i dont mind converting for him. I’m not sure if he still likes me. He may have moved on already since it has been a month since that day he told me we cannot be tgt. It is highly possible he may like someone else already? He is strong in his mind, if he had alr said he wouldnt love me he may have already let us go. I still think of him all the time, i cant get rid of him off my mind. We are still friends. We only met up once after that day we cleared things up.

So we met recently and we still cross the boundaries of friends. Some of our actions are clearly more than just friends. The way we look into each other’s eyes and we hug each other really tight before we part. I told myself, enjoy those moments i have with him that day. Dont think about anything else. When we talk through text, he tend to use that chance to avoid me to stop himself from talking too much with me.

What am i supposed to do.. Should i just tell him that i wouldnt mind converting to islam for him so that religion would no longer be an issue? Regardless whether he still likes me a not, should i just tell? Because 10 years later, i think i will regret for not saying it out. Or should i wait for the next meetup and see how it goes? If we’re still good and i could feel that he still likes me, then by then i go for it?

Feel free to give me your opinions. Thank you everyone for reading.

Source: Gay SG Confessions

February 23, 2015
Budget Should Look To Future, Help Middle Class

Sandwiched between raising a family and caring for their ageing parents as the costs of living rise, the middle class could receive more attention in the Budget this year, which will be delivered by Finance Minister Tharman Shanmugaratnam this afternoon.

And while there have been predictions from some quarters of an election Budget with goodies in the offing, some observers have cautioned against focusing too much on the short term, saying the Budget should be assessed on whether it delivers a convincing long-term plan for the Republic.

Employment and income insecurity, wage stagnation and inflation, as well as anxiety about their own and their children’s financial future are some of the chief concerns of middle-income earners — who are the largest stakeholders in the country, said Institute of Policy Studies sociologist Tan Ern Ser. “If Singapore aspires to be a middle-class society … then there are good reasons to address (the middle-income group’s) concerns,” he added.

Subsidies to help people look after their elderly parents or for childcare and their children’s education would go a long way for middle-income earners, because these are their heaviest burdens, said Mr Vishnu Varathan, a Singapore-based economist at Mizuho Bank. He added that more rebates could also be expected for middle-income households, with income earners taking on skills training or further education.

Earlier this month, Mr Tharman, who is also Deputy Prime Minister, indicated that this year’s Budget would focus on building Singapore’s future in terms of addressing retirement adequacy and helping Singaporeans, both those still in school and mid-career, have good careers.

Mr Tharman chairs the 25-member SkillsFuture Council, a national panel set up last September to develop a system of education, training and progression for Singaporeans. He also said the Government was putting the final touches to the Silver Support Scheme, along with other measures to help the low-income elderly.

The needs of the “sandwiched” class must be addressed as they do not qualify for schemes that help the poor, nor do they have the financial capability of upper-income earners, said Associate Professor Eugene Tan from the Singapore Management University School of Law.

“If you talk about trying to ensure Singapore is ready for the future, it becomes critical to ensure this group is well equipped and has confidence in the future of the country. If the Budget can lift this broad middle class … who occupy the heartlands of Singapore … then the future of Singapore will become secure as well,” he said.

Associate Professor Bilveer Singh from NUS’ Department of Political Science said public expectations for this year’s Budget are high, given that it is Singapore’s Golden Jubilee and that there is talk of the elections looming. The next General Election must be held by January 2017.

“Partly, the Government created these expectations for itself … People will say, ‘Okay, what is there for me after 50 years?’” he said. “Budget is when people will see the political will from the Government — can this Government really deliver? Is the Government really caring?”

In a research note published last week, Barclays economists Leong Wai Ho and Bill Diviney pointed to previous incentives that had preceded elections, such as the S$3.2 billion Grow and Share package in 2011.

Dr Tan Ern Ser noted that, increasingly, Singaporeans expect the Government to provide support not only in weathering economic storms, but also in buffering them against risks of inflation, employment and income insecurity as well as wage stagnation. “In short, harping on self-reliance and focusing on job creation and skills training alone are not sufficient,” he said.

Assoc Prof Tan said the Government would have to show that the Budget would not be about short-term measures. “I hope we measure the worth of the Budget by looking at what it actually does to strengthen our capabilities and capacity to do even more and to do well in the years ahead,” he said.

Source: www.todayonline.com

February 23, 2015
Have You Benefitted From PA Events?

I will share about Peoples’ Association activities.

Parties, celebrations, goodie bags, free buffet spread. Grassroots have it well.

My question to Singaporeans, how many of you have participated or benefited from these? Little or none.

Do anyone realize, its always the same old gang or participants? Why? Die hard participants who benefits from everything.

One question we need to ask: Whose money are these?

The PAP strongest point, to which the oppositions are generally very weak in, is public funds.

Participants fear the loss of benefits. Volunteers shudder at the fact that their benefits run out (Free parking within this GRC or constituency, priority school application, HDB BTO after 3 years of service).

Last year’s Grassroots retreat by Sengkang West brought about the question of cost. Grassroots Leaders are given a subsidy of S$100 from Peoples’ Association and perhaps, additional ‘out of pocket’ subsidy from the Member of Parliament.

These are your money! Why are retreats overseas? Why not OBS? Or NTUC Chalet? Or cheaper locations like Batam or Bintan? Excuses like ‘Bonding’, ‘Appreciation’ etc. Do anyone realize these are the ground people for the PAP?

Have they heard your voice? Have they represented your concerns to the Government? Aren’t Grassroots Leaders supposed to link the people and the Government together? Ask yourself this question, when was the last time you saw your Grassroots Leader, other then them walking around?

Residents’ Committee are heavily subsidized by HDB and Peoples’ Association. Yet, we pay for the said courses. Ok, justified if they need to maintain the Center.

However, do anyone realize these RCs and CCC have surpluses of tens and some hundreds of thousand dollars? How did these money benefit the residents? Or did it benefit just a core group of individuals?

Singapore, there are many unanswered questions. No one to check on them, no one to question, no one to challenge. All these are kept away from the average Singaporean. Who justifies their balances? Will they be willing to display their accounts of each RC for residents knowledge?

Obviously no.

On the surface, Facebook post, media coverage on activities appears wonderful. My question would always be, how many residents actually benefited from it? In an average of 25,000 residents per constituency, an event that captures 100 participants is less than 0.5% of the population and the amount spent? A GRC event, say, 120,000 residents but participation figures? 1000? That is less than 1%!

Well, Singapore, please spend some time to think about it. The media appears to display huge participation. Well, think again. Its your money.

Singapore Son

TRS Contributor

Source: www.therealsingapore.com

February 22, 2015