Singapore’s budget has ‘something for everyone’ amid rising living costs. Does move signal an election is near?
- Singapore will give handouts of US$445 to each household and offer rebates to businesses amid inflation and higher operating costs
- Given this is one of the ‘more generous budgets in recent times’, analysts say the move could be setting the stage for an election
Analysts said there appeared to be “something for everyone in the budget”, a historical trend that suggested the approach of the polls, due to be called by November 2025.
“Many things stood out, but one is the massive investments of S$40 billion by the end of the decade to strengthen our social safety net,” said Eugene Tan, a law professor from the Singapore Management University (SMU).
Wong, the deputy prime minister and finance chief, said the government would roll out measures including S$600 (US$445) in vouchers for each household and rebates to businesses, which would provide “near-term relief” amid inflation and higher operating costs.
“These are the concrete ways to help Singaporeans tackle cost-of-living pressures. Let me assure everyone, we will always have your backs,” he said.
Why this year’s Singapore budget has extra political significance
Meanwhile, all companies will receive a 50 per cent corporate income tax rebate, capped at S$40,000.
To attract more investors and encourage companies to make sizeable investments in Singapore amid greater competition, Wong said the government would be introducing a Refundable Investment Credit – a tax credit with a refundable cash feature.
“Governments around the world are rolling out vast subsidies to attract investments, especially in strategic industries. For example, in November last year, Japan announced that it would allocate 2 trillion yen, or about S$18 billion, to support its semiconductor industry,” he said.
“We cannot afford to engage in a bidding war with the major economies, but neither should we stand still and just do nothing.”
‘One of the more generous budgets’
In May, all Singaporeans above the age of 40 will also get a S$4,000 top-up of SkillsFuture credits – the state’s education and training initiative for adults – while younger citizens will receive the top-up when they turn 40, Wong said.
The S$4,000 credit would be “more targeted in scope”, said Wong, and users would be confined to selected training programmes that had “better employability outcomes”.
Singaporeans aged over 40 will also be given subsidies to pursue another full-time diploma at polytechnics, institutes of technical education and arts institutions from the 2025 academic year.
A training allowance will also be given to Singaporeans who enrol in these full-time courses, equivalent to half of one’s latest average income but capped at S$3,000 per month.
“This must be our shared commitment to one another – to help our fellow Singaporeans develop to their fullest potential, and to have productive and meaningful careers,” Wong said.
On how the government planned to deal with its ageing population, Wong said it would set aside S$3.5 billion for Age Well SG – a programme to support senior citizens as they age.
The money will go into a range of initiatives over the next decade, such as developing more assisted-living options and amenities at residential estates to allow seniors to live more independently and safely in the community.
The initiative, which covered challenges and proposals on nearly every aspect of Singaporean life, was largely viewed as the first concrete sign of an impending change in leadership for the republic – its third since independence in 1965 – and described as a “primer” and “election manifesto” by political observers who earlier spoke to This Week in Asia.
“As part of Forward Singapore, we are making significant policy shifts to strengthen our social safety nets, and provide more assurance to Singaporeans,” Wong said on Friday.
The government will spend about S$5 billion on Forward Singapore policies for the 2024 financial year, and close to S$40 billion in total by the end of the decade.
‘It’s like a bonus’: Singapore shoppers flock to Malaysia as dollar rides high
Wong said the government would be giving its Assurance Package a further boost, with an additional S$600 in vouchers for all Singaporean households to be dished out in two phases, on top of a so-called Cost-of Living payment of between S$200 and S$400, depending on income and properties owned.
This brings the value of the Assurance Package up by S$1.9 billion, from the estimated S$10.1 billion.
“We have designed the Assurance Package so that lower-income families get more support. We have also ensured that larger households, particularly those with seniors and children, get more support,” Wong said.
There will also be a personal income tax rebate of 50 per cent for the assessment year of 2024, capped at S$200. Wong said the rebate would cost the administration S$350 million.
He also revealed a rebate to cushion the impact of the property tax changes this year, adding there would be another rebate in 2025 if necessary.
In his 2022 budget speech, Wong had rolled out a two-step increase in property tax rates for homes. This was aimed as a “wealth tax” on investment properties and higher-end segments of owner-occupied private properties.
However, rents surged from 2022, leading to annual values increasing sharply, which resulted in the proportion of affected owner-occupied properties nearly doubling to 13 per cent, instead of the initially expected 7 per cent, he said.
03:04
Singapore’s PM Lee feels ‘great fortune, honour’ ahead of power transition to Lawrence Wong
“It is possibly one of the more generous budgets in recent times, giving rise to the notion that this may be an election budget,” said Mustafa Izzuddin, a senior international-affairs analyst with Solaris Strategies Singapore.
Many of the plans and policies would be implemented in the later half of this year or early next year, noted Felix Tan, an independent political observer, who said this could “point towards setting the scene for an election then”.
He also pointed out that the budget focused on providing for families, seniors and vulnerable segments of the population, with many social welfare policies.
However, the announcements were still considered “muted” compared with those of past years, and largely a continuation of existing policies, Tan said.
Singapore’s PM Lee will hand over power to Lawrence Wong ‘before next election’
While speculation has swirled in recent weeks that the transition could occur soon after the budget debate, which will end in mid-March, aligning with Lee’s plan to hand over power by November this year, analysts told This Week in Asia previously that it was unlikely the ruling party would be “hasty” about the shift.
In 2022, Wong, 50, was voted by his fourth-generation (4G) peers in the PAP to take over from Lee, in what will be only the third leadership succession in Singapore since independence in 1965.
The next vote must be called by November 2025. The PAP has won 14 general elections and governed Singapore uninterrupted since 1959, with Lee, the son of first prime minister Lee Kuan Yew, having led the party in four polls.
