Singapore Budget 2022
On 18 February 2022, Singapore Finance Minister Lawrence Wong delivered his Budget Speech. Some major tax changes were announced, including among others, GST hike, higher personal income tax for the top 1.2 per cent of personal income taxpayers, higher property tax and carbon tax. With guidance from your economics tutor Singapore in your economics tuition Singapore class, discuss the economic implications of these changes on Singapore’s government revenue as well as on different groups of Singapore population.
GST Hike
The much-anticipated GST (goods and service tax) will take place in two stages from the beginning of next year. On 1 January 2023, GST rate will increase from the current 7 per cent to 8 per cent. It will further increase to 9 per cent from 1 January 2024. The GST hike is expected to generate an additional annual revenue of S$3.5 billion once the full hike is implemented in 2024. GST is an indirect, regressive tax which means lower income groups pay more as a proportion of their incomes. In discussion with your economics tutor Singapore in economics tuition Singapore, explain the impact of GST hike on lower income groups in Singapore.
To cushion the impact of GST hike on lower income groups in Singapore, an additional S$640 million will be added to the S$6 billion Assurance Package. Under the Assurance Package, Singaporeans aged 21 years and above will receive cash payouts between S$700 and S$1,600 over the next five years. Eligible seniors aged 55 and above will receive cash payouts between S$600 and S$900 over the next three years. This is on top of the S$450 MediSave top-ups for all Singaporean seniors and children over the next three years. For more details on the cash payouts, you may consult your economics tutor Singapore in your economics tuition Singapore class.
In addition, eligible HDB households will receive U-Save rebates ranging from S$330 to S$570, depending on their flat types, to help lower- and middle-income groups cope with their utility bills and service and conservancy charges. There will also be an additional S$400 in the form of CDC (Community Development Council) vouchers in 2023 and 2024, on top of the S$100 CDC vouchers disbursed in 2022. To learn more about U-Save rebates and CDC vouchers, you may sign up for economics tuition Singapore with a reputable economics tutor Singapore. Mr Edmund Quek is a well sought-after economics tutor Singapore who has over two decades of experience teaching economics tuition Singapore. To find out more about this economics tutor Singapore, please visit the website of his economics tuition Singapore centre at www.economicscafe.com.sg.
Higher Personal Income Tax Rates For Top Earners
With effect from the year of assessment 2024, resident taxpayers with chargeable income in excess of S$500,000 to S$1,000,000 will be subject to 23 per cent tax, up by 1 per cent from the current 22 per cent for chargeable income in excess of S$320,000. For resident taxpayers with chargeable income in excess of S$1,000,000, they will be subject to 24 per cent tax, up by 2 per cent from the current 22 per cent for chargeable income in excess of S$320,000. This change is expected to affect the top 1.2 per cent of personal income taxpayers and generate an additional tax revenue of S$170 million per year from 2024 onwards. Personal income tax, like other direct taxes in Singapore, is a progressive tax. This means higher income groups pay more as a proportion of their incomes. Personal income tax rate was last raised for the top income tax bracket in 2017, where personal income tax rate for chargeable income in excess of S$320,000 was increased from 20 per cent to 22 per cent for resident taxpayers. Non-resident taxpayers are taxed at a flat rate of 15 per cent or the resident tax rates, whichever is higher. You may consult your economics tutor Singapore in your economics tuition Singapore class for a comparison of Singapore’s personal income tax regime with that of the United States of America and China.
Higher taxes on properties, luxury cars and carbon were also announced at this year’s Budget. However, these are expected to only affect the higher income groups in Singapore.
Linda Geng
Economics Tuition Singapore @ Economics Cafe
Principal Economics Tutor: Mr. Edmund Quek