Review of Budget 2019

Just last Monday, the Budget 2019 was delivered by Finance Minister (and probably Prime Minister designate) Heng Swee Keat. This budget was long awaited as rumours of a General Election would be coming soon. I did think prior to this budget that this budget would be indicative of whether the GE will be held this year or next. 

To sidetrack a bit, while I have been following the Budget for a few years (thankfully I've started to understand the Budget more and more), Budget 2018 was a significant one for me. First, it was when Minister Heng announced the increase in GST from 7% to 9% in the next term of Parliament (2021-2025), and the immediate increase of 10% of the excise duty of all tobacco tax. Secondly, it was announced the day before my enlistment, so I was just lying on my bed feeling depressed before my impending doom.

Before I begin my recap and (attempted) analysis of the Budget, please note that what I present is not whole for 2 reasons.
  1. If I were to cover the whole budget in this post, you would probably fall asleep before reaching the end. You can catch the summary of the budget at the following sites (different sites for different perspectives)
  2. The Committee of Supply (COS) debate is still ongoing for another week or so, hence the scope of my post is largely on the speech by Minister Heng, rather than the individual ministries' upcoming plans. I may do a follow up post if interesting developments occur.
The first point highlighted by Minister Heng in his speech was on the decline in support of Globalization, the need to sustain our defence forces, the introduction of a sixth pillar of Total Defence, Digital Defence, and hence justifying the need to spend 30% of the Budget on defence. While the emphasis on defence spending is rather routing in past Budgets, it is worth looking towards the plans by Home Team regarding the set up of the Home Team Science & Technology Agency.

Next, Minister Heng went on to speak on the workforce, noting on the various measures to continually improve our workers, be it the Professional Conversion Programme or the Career Support Programme.

The first main surprising point came when the Dependency Ratio Ceiling (DRC) for the Services Sector will be lowered over the next few years. For the uninitiated, this means that the percentage of foreigners a company in the service sector can hire is reduced. 

Initially, I was very surprised when I read this part. I initially thought that this was to tackle the anti-foreigner sentiment that was present in Singapore. However, I remembered that this issue was solved after the watershed GE2011. Has there been a rise in xenophobia again?

Turns out I was probably wrong. If this was an issue about too many foreign workers, the DRC would have been lowered across all sectors, noting the high DRC ratio of 87.5% for Construction and Processing, and 77.8% for Marine Shipyard, as compared to the 40% (soon to be 35%) for Services sector. Minister Heng explained this reduction was to promote the number of jobs for Singaporeans, and also that continually relying on foreign manpower is unsustainable. In other words, the inflow of foreign workers has to be maintained instead of rapidly increasing. Meanwhile, we have to continue to train and upgrade our workers such that jobs can be occupied by locals instead.

After talking more about businesses, social spending, and a touch on education, Minister Heng then proceeded to present, if I may, a slew of goodies for some Singaporeans.
  1. The qualifying criteria and payouts for the Workfare Income Supplement were adjusted to ensure more workers benefit from this supplement
  2. The enhancement of the Community Health Assist Scheme (CHAS) to benefit all Singaporeans, notably those with lower income and with complex chronic conditions
  3. More government investment into CareShield Life and ElderFund
  4. An investment of $8B to the Merdeka Generation Package including, but not limited to
    • Medisave Top-Ups
    • PAssion Silver Card Top-Ups
    • Outpatient Care subsidies
    • Subsidies and Incentives for MediShield Life and CareShield Life
  5. A 5-year top-up of $100/year into MediSave accounts for 5 years for those above 50 without the PGP or the MGP
  6. The Bicentennial Bonus, which includes, but not limited to
    • GST Vouchers for lower-mid income families
    • Cash Handouts for those under Workfare
    • Tax Rebates
    • Top-ups of Edusave Accounts for Primary and Secondary School Students
    • Top-ups of Post Secondary Education Accounts for 17-20 Year Olds (yay, finally something for my brother and I!)
    • CPF Top-Ups for those with lower balances
    • S&CC Rebates and more subsidies for those who need help with public transport
However, with so many goodies, how does the government collect back revenue to ensure we do not spend too much and cause the country to lose money? Do take note that the government will not be earning back the money via the increase in GST just yet, since the change will take place in the next parliament.

The government has first doubled the diesel tax from $0.10/L to $0.20/L, but they also slashed the annual special tax on diesel vehicles by a rather significant amount. This taxes the user based on usage rather than the owning of vehicles. I'm not sure if this will result in more taxes collected, but Minister Heng has requested for the taxi companies to pass the savings on the special tax to the drivers, ensuring they do not suffer doubly.

The government also lowered the upper bound for goods that are not taxable from $600 to $500 for those away from Singapore for more than 48 hours, and from $150 to $100 for those travelling less than that. In other words, effective immediately, if I travelled for more than 48 hours away from Singapore and i brought back something worth more than $500, I am to pay tax for it. 

Also, they lowered the non-taxable total volume for alcoholic products (spirits, beers, wines) from 3 Litres to 2 Litres. So similarly, if you bring in more than 2 Litres of alcoholic products, you are due to pay taxes too. 

Honestly, up till when I read the budget, I did not know about such a rule. I only thought you had to declare if you had in your possession anything suspicious looking (like a knife, gun, scissors, grenade lookalike) or have cash more than USD$10,000. Well, I guess that's something I learnt that day, and now the viewers can learn too!

In summary, I feel that the budget certainly feels like quite a giveaway to Singaporeans, making this quite a good (though not definite) indicator towards the next General Elections, given the elaboration on the MGP and the Bicentennial bonus. 

However, personally, I sense a rather "Robin Hood" style of budget from this time round. Those who bear the brunt of the increase in taxes are either big companies or travellers who spend a lot, in other words those with higher incomes. Those who are the biggest recipients of the 'goodies' are the lower-income. Certainly, it definitely makes sense to cater to the lower-income group to ensure they are able to make it through tough financial times. However, again personally, I would also like to see some government incentives to ensuring that the higher-income groups or highly educated personnel stay in Singapore and do not leave for other countries. Brain drain may be a big issue if well educated and qualified Professionals, Managers, Engineers, and Technicians (PMETs) feel that they are not being recognized or helped by the government. Of course, I may be overthinking and perhaps the PMET/Higher income groups are very comfortable at where they are, and do not need further help. But it just does not feel quite right to continue helping the poor but not recognizing the rich for their talents and instead just taxing them. An issue the government may want to look into is the issue of unemployment of university graduates.

Of course, there doesn't seem to be anything special for NSFs/NSMen, which is quite disappointing though not unexpected since the focus this year is on the MGP and the Bicentennial celebrations.

That concludes my recap and (attempted) analysis of the Budget 2019. Let me know what you think! Either reply to this post or contact me directly, I would love to have a civil discussion!

Comments

Post a Comment

Popular posts from this blog

Review of Circles.Life (1 Month On)

About more than a month ago, I wrote a blog post about wanting to change telco away from Singtel to a telco which provides more data for lesser costs. During the IT Show, it was down to M1 and Circles Life. I chose Circles Life in the end because of a lower overall cost (looking to the future), considering its popularity, and partially because M1's queue was super long (more than 3 hours wait). After more than a month of usage, it is a good timing for me to blog about my experience using Circles Life, to talk about the pros and cons. Although I got my new SIM on a Saturday, I had to continue using my Singtel SIM until Monday night, when the port over took place. In the meantime, I was trying to figure out the Circles Life app. My new SIM, which was a temporary number from Circles Life, had to be used to activate the app. Afterwards, I registered my existing number for the port over, and then changed back to my old SIM. On Monday evening, I changed over to my new SIM and used WiF...
Read more

Journey to the License: The End (Part 1)

As many who have been following my Instagram and Facebook would know, I've revealed last week that I passed my driving test, and am now officially a qualified driver! Although I passed my test on 4 Jan (9 days ago), I generally kept the pass as a secret from many till my Driver's License came and when I posted last week. I realized that my previous 2 posts on the Journey to the License was not too well received, and perhaps they were a bit long winded. Therefore, I also decided that since I've made my test pass public, I will also wrap up the series by talking about what happened since I passed my internal evaluation till the driving test. As for what happened during stage 2-4, those interested can drop me a message, or maybe one day I'll write about it (or on a separate link). I managed to pass my 5.01 Internal Evaluation on 23 December last year, having secured a rare Session 5 (the OT slot for BBDC instructors). Given that the date was near Christmas, many i...
Read more

On MUN and my High School Life

Before I start, I would like to pay tribute to the late, great Kofi Annan, former United Nations (UN) Chief, who passed away at a ripe old age of 80. Mr Annan lived a life worth remembering, having brought the UN through trying times such as the invasion of Iraq. He was also the founder of the Millennium Development Goals (MDG), and set the direction for the UN going into the 21st century. He was not the most successful UN Secretary General, but he certainly left the UN in a better place than when he inherited it. Thank you sir. ----------------------------------------------------------------------------------------- Recently, I was invited back to NUSHS for the SDYC Dinner and Dance. For the uninitiated, SDYC stands for Sustainable Development Youth Convention, my school's version of a MUN. For the still uninitiated, MUN stands for Model UN, a simulation of the actual UN when youths come together to represent different countries (or stakeholders) and debate on issues concerni...
Read more