Last Updated on January 10, 2023 by Parentology
This was first published in Tree of Wealth Sg
The theme for the Singapore Budget 2022 is “charting our way forward together”, which points to Singapore’s financial plans post-Covid-19.
The speech was delivered by Finance Minister Lawrence Wong on Friday (February 18), who said that the government will spend around S$109 billion in the coming fiscal year to “secure the livelihoods of Singaporeans.”
Minister Wong also covered the essential ways that Singapore will be preparing for the world after Covid-19, and also stressed that Singapore has to strengthen the country’s “system of collective risk-sharing”.
Here are some key takeaways from Budget 2022, and how it will affect Singaporeans financially.
Rise in GST from 7% to 9%
One of the most significant points of Budget 2022 is that Singapore is on track to raise its Goods and Services Tax (GST) to 9%.
The GST hike was first announced in Budget 2018, and was said to be introduced anywhere from 2021 to 2025. In his speech, Minister Wong stated that the GST will go up on 1 January 2023, from 7% to 8%. It will later rise to 9% on 1 January 2024.
Increased taxes for high income earners
The personal income tax rate for individuals in the top marginal tax bracket is set to increase from 2024.
For those earning between S$500,000 to S$1,000,000, the personal income tax rate will be raised from 22% to 23%. Those earning above S$1 million will have their personal income tax raised to 24%.
Property tax will also be increased. People who are renting out their residential properties will see an increase in the non-owner occupied property tax rate from 10% to 20% now, to 12% to 36%.
Lastly, there will also be an increase in the Additional Registration Fee (ARF) for luxury cars in Singapore, from 180% to 220% for cars with an Open Market Value of more than S$80,000.
Payouts to offset the effects of GST hike
S$6.6 billion Assurance Package
In his speech, Minister Wong said that lower-income groups will continue to receive support, and GST will continue to be absorbed for publicly subsidized healthcare and education.
The S$6.6 billion Assurance Package was also implemented to help Singaporeans cope with the increase in GST.
Under the Assurance Package, there will be a cash payout of S$700 to S$1,600 over the next five years for all Singaporean adults, while eligible seniors over 55 will receive a Seniors’ Bonus payout of S$600 to S$900 over the next three years.
All Singaporean households will also receive S$200 worth of Community Development Council (CDC) Vouchers in 2023 and 2024.
According to the Budget 2022, these payouts will cover at least five years of additional GST expenses for a majority of Singaporean households.
Enhanced GSTV scheme
The GSTV scheme was introduced in Budget 2012 to help low-income households to cope with costs. The scheme includes cash payouts, providing Singaporeans above 65 years old with a CPF MediSave top-up each year, and U-Save payouts to low and middle-income households to offset utility bills.
Under Budget 2022, the Assessable Income threshold will be increased from S$28,000 to S$34,000, allowing more Singaporeans to receive the cash payouts.
The cash payout will also be increased to S$500 for those residing in homes with Annual Value (AV) of S$13,000 and below, and to S$250 for those residing in homes with AV S$13,000 to S$21,000
Eligible households will also receive rebates for their utilities bills that are double the regular amounts for the remaining three quarters of 2022 under the GSTV-U-Save programme.
Benefits for workers in Singapore
Enhancements to the Workfare Income Supplement (WIS) scheme
As part of Budget 2022, younger workers aged 30 to 34 will soon be eligible for WIS scheme payouts, after enhancements have been made to the scheme.
The Finance Minister said that this will help workers in this age group to start saving for housing and retirement earlier in their careers.
From 1 January 2023, the qualifying income cap will be raised from S$2,300 to S$2,500 per month to benefit more low-wage workers.
CPF basic retirement amount to be raised
The CPF Basic Retirement Sum will be raised by 3.5% per year for those turning 55 from 2023 to 2027.
Along with the BRS, the Full Retirement Sum (FRS) and Enhanced Retirement Sum (ERS) will also go up.
The government will also raise the contribution rates for senior workers between 1.5% to 2% in 2023. This will help aid seniors in giving them greater assurances for their basic retirement needs.
Increased salaries for lower-wage workers
The Government will co-fund the wage increases of lower-wage workers between 2022 and 2026.
For those earning up to S$2,500, the Government will co-fund 50% of the wage increments for the first two years. This will fall to 30% in 2024 and 2025, and 15% in 2026.
The Progresive Wage Model (PWM) will also be extended to more sectors over the next two years, and will include industries like retail, food services, and waste management. Some occupations that will be included include security officers, drivers, administrative workers and more.