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Source:
www.mof.gov.sg |
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BUDGET STATEMENT 2007 |
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Ready for the Future, Ready
for the World |
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An Excerpt |
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Raising the Goods and Services Tax Rate |
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I have decided to raise the GST rate to 7%
with effect from 1 July 2007. |
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It is prudent to implement the GST increase
now, in one step, while the economy is strong. This is expected to raise
additional revenues of $750 million this year, and $1.5 billion per year
going forward... |
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GST Offset Package |
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This brings me to the measures we will take
to offset the GST increase. |
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We will put in place a comprehensive set of
measures for Singaporeans, with more for the lower-income. |
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The majority of Singaporeans will get offsets that
are equal to at least five years of the increase in their GST expenditures. |
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Lower-income households will get much more than five
years¡¯ worth. This GST Offset Package will cost the Government $4 billion in
total over five years. |
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Helping Singaporeans Cope with
the GST Increase |
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GST Credits |
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Of this $4 billion, $1.8 billion will
be given out as cash, in the form of GST Credits. All adult
Singaporeans will receive GST Credits in annual instalments. |
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The amount that a person receives
depends on two factors ¡ª his assessable income (AI) and the annual
value (AV) of his home, which is used as a proxy for his wealth. |
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I will give lower-income Singaporeans
larger GST Credits. |
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Those who live in one- to three-room
flats[4] and have annual assessable incomes of $24,000
or less will qualify for the largest quantum of $1,000, to be paid
out in instalments of $250 per year over four years. |
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Nearly three-quarters of the
population will receive GST Credits of $800, paid out in $200 per
year. |
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Next, if you live in a larger home
with an AV of more than $10,000, but you earn less than $100,000 a
year, you will get $400 in GST Credits. |
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The top income group comprising those
earning over $100,000 a year will get $100. It is a small gesture,
but recognises that the GST increase affects everyone. |
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See:
Table 1 ¨C Structure of GST Credits |
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NSmen and NSFs, including those aged
below 21, will also get an additional $100 of GST Credits, to
recognise their contributions to national security. |
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They will get their bonus GST Credits
in the year that they qualify. So a person who becomes an NSF in
2008 or 2009 will also get the bonus GST Credits. |
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Singaporeans will have to sign up just
once to qualify for all four years of GST Credits, though the
amount they get will be assessed yearly based on their income and
residence. |
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The first instalment will be paid out
on 1 July this year, at the same time as the GST increase. |
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Senior Citizens¡¯ Bonus |
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I will give senior citizens more. Many
of them will be concerned about the GST increase, because they
have to meet living expenses out of their savings. |
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We will therefore provide Singaporeans
aged 55 and above with a Senior Citizens¡¯ Bonus, as long as they
have annual assessable incomes of $100,000 or less. |
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Those aged 60 and above will get more,
with amounts ranging from $1,000 for those in the lower-income
group, to $400 for those who are better off. |
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As with the GST Credits, the quantums
will depend on their income and the annual value of their homes. |
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Two-thirds of the Senior Citizens¡¯
Bonus will be given in cash and one-third credited into their
Medisave Accounts, on 1 July of each year. |
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For example, a 65-year-old retiree
living in a three-room flat will get $1,000 of Senior Citizens¡¯
Bonus on top of the $1,000 he will get in GST Credits, making a
total of $2,000 over four years. The Senior Citizens¡¯ Bonus will
cost the Government $400 million. |
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See:
Table 2 ¨CStructure of Senior Citizens¡¯ Bonus |
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Top-ups to Post-Secondary Education
Accounts |
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We must also help families with the
costs of their children¡¯s post-secondary education. |
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As I mentioned earlier, we will open
Post-Secondary Education Accounts (PSEA) for all Singapore citizen
children aged from seven to 20 from next year. |
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We will top up these accounts from
time to time, when our surpluses allow, and give more to those who
are less well-off. |
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I will credit the accounts of those in
secondary school or older with $400 in 2008, and another $400 in
2009. Those of primary school age will get less as they can get
more PSEA top-ups in future years if we are able to share
surpluses. |
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The PSEA top-ups will cost $400
million and benefit around 650,000 children. |
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See:
Table 3 - Structure of PSEA Top-ups (each year) |
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Utilities-Save (U-Save), Service
and Conservancy Charges (S&CC), and Rental Rebates |
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As part of the GST Offset Package, I
will also extend the Utilities-Save, S&CC and Rental Rebates to
eligible HDB households for five years, from 1 April 2007 to 31
March 2012. |
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This will help low to middle-income
households cope with increased household expenses due to the GST
increase. |
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The U-Save and S&CC rebates will also
be extended to those living in HDB executive flats. These rebates
will benefit 800,000 HDB households and cost a total of $800
million over five years. |
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Property Tax Rebate |
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I will provide a one-off property tax
rebate of up to $100 per year in 2008 and 2009, in other words,
$200 in total, for all owner-occupied residential properties. |
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This will benefit about one million
property owners, with three- and four-room HDB flat owners paying
little to no property tax during these two years. This will cost
the Government $200 million. |
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Assistance for Low-Income Families
with Young Children |
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To help lower-income families with
young children, we will increase financial assistance for
kindergarten and childcare. |
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We will enhance the Kindergarten
Financial Assistance Scheme (KiFAS) by increasing the level of
subsidy from 75% of kindergarten fees to 90%, which means that
low-income families will now be able to enjoy a subsidy of about
$80 a month. |
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Subsidies for the Centre-Based
Financial Assistance Scheme for ChildCare (CFAC) will be increased
by between $20 and $40 a month for each child. |
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Other enhancements to the ComCare Fund
programmes will be announced by MCYS later. These enhancements
will cost a total of $6 million a year. |
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Assistance for Pensioners |
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The Government has decided to increase
the Singapore Allowance further by $20 per month, and raise the
gross pension ceiling from the current $1,100 to $1,150 per month.
The revision will give an additional $4 million a year to
pensioners residing in Singapore. |
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Public Transport Fund |
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While public transport remains
affordable for the majority of Singaporeans, there are
lower-income families who need more help. |
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The Government will commit $10 million
to a Public Transport Fund (PTF) in October 2007, to be given out
over three years. This will provide additional help to
lower-income households for their public transport costs where
necessary. |
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Assistance through Citizens¡¯
Consultative Committees (CCCs), Self-Help Groups and VWOs |
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Although we have a comprehensive GST
Offset Package, it is possible that some households may face
additional difficulties. |
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The best way to help them is through
flexible assistance from their CCCs. I will therefore top up the
CCC ComCare Fund by $5 million over five years. |
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To help lower-income Singaporean
families, the Government will also provide $2 million over five
years to the Self-Help Groups, and $3 million over five years for
Government-funded VWO programmes. More details will be announced
by MCYS. |
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Additional Subsidies for
Healthcare, Education and Service and Conservancy Charges |
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The Government will provide the
restructured hospitals and polyclinics with more grants to fully
absorb the additional GST on subsidised healthcare services. This
will cost the Government an additional $12 million a year. |
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We will also absorb the GST payable on
school and miscellaneous fees, as well as fees and tuition grants
at ITEs, polytechnics and universities. This will cost an
additional $40 million a year. |
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Town councils will also get an
additional $10 million a year to absorb the additional GST payable
on Service and Conservancy Charges. |
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Overall Impact of the GST Offset
Package on Households |
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Let me summarise the overall impact of
the GST Offset Package for Singaporean households. |
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Most households will receive GST
Credits, Senior Citizens¡¯ Bonuses, PSEA top-ups, U-Save, S&CC and
rental rebates, and property tax rebates. |
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Taking these offsets alone, those
living in four-room flats will receive benefits that are, on
average, seven times the extra GST they will have to pay each
year. |
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In other words, seven years¡¯ of
offset. Even those in executive flats will receive four years¡¯
worth of offset. |
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The lowest-income households will
receive the most ¡ª for instance, two-roomers will receive about 16
years¡¯ worth... |
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More... (Full Text of Statement) |
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Source:
www.mof.gov.sg Press Release
15 Feb 2007 |
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FrontPage Edition: Thu 15 February 2007
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