The Singapore Government will be spending more on sectors hit hardest by the novel coronavirus (COVID-19) outbreak — namely tourism, aviation, retail, F&B and point-to-point transport services — out of the S$4 billion allocated to stabilising the economy in the wake of the epidemic.
Delivering his Budget 2020 speech in Parliament on Tue (18 Feb), Deputy Prime Minister Heng Swee Keat said that the outbreak took place following what he noted was Singapore’s weakest economic growth since the 2008 financial crisis.
The COVID-19 outbreak, he said, has resulted in a decreased in visitor arrivals to Singapore, as well as air traffic through Changi Airport and hotel occupancy rates.
The Stabilisation and Support Package — a scheme that will assist workers in staying employed and ensure improved cash flow for enterprises in Singapore — will thus provide additional assistance to the aforementioned sectors in recovering from the hit.
Under the package, workers can benefit from an enhancement of the Wage Credit Scheme, which will see the qualifying monthly salary cap raised to S$5,000 to include more workers, among other measures such as the S$1.3 billion Jobs Support Scheme for Singapore citizens and permanent residents (PRs).
Mr Heng, who is also the Finance Minister, said that a 30 per cent property tax rebate will be given to accommodation and function room components of licensed hotels and serviced apartments for this year.
Meetings, incentives, conventions and exhibitions (MICE) venues such as the Suntec Singapore Convention and Exhibition Centre, Singapore Expo and the Changi Exhibition Centre will also be given the 30 per cent property tax rebate.
A 15 per cent property tax rebate will be given to international cruise and regional ferry terminals, while a 10 per cent rebate will be given to integrated resorts, he added.
Mr Heng also said that companies in the tourism industry will also be eligible to an interim loan programme to improve cash flow.
Under the loan programme — which will run for a year starting next month — qualifying firms can borrow up to S$1 million, with the interest rate capped at 5 per cent per annum from participating financial institutions.
The Government will provide 80 per cent risk-share of said loans.
Touching on the aviation sector, Mr Heng said that the Government will be granting a 15 per cent property tax rebate for Changi Airport, in addition to giving out rebates on aircraft landing and parking charges, assistance to ground handling agents and rental rebates for shops and cargo agents at the airport.
Qualifying retail and food services companies will be eligible for a 15 per cent property tax rebate — for selected commercial properties — or a rental waiver from government agencies such as the National Environment Agency (NEA) and the HDB (Housing and Development Board), said Mr Heng.
NEA for example will provide a full month’s rental waiver to stallholders in NEA-managed hawker centres and markets, while HDB will provide half a month of rental waiver to its commercial tenants.
For point-to-point transport services, Mr Heng said that the Government will allocate S$45 million towards the S$77 million Point-to-Point Support Package for taxi and private-hire car drivers, which was announced last week.
The remainder will be provided by taxi and private-hire car operators.
Noting that the duration and severity of the COVID-19 outbreak — and its impact on the global economy — remain unpredictable, Mr Heng said that the Government will be channelling an additional S$800 million in this year’s Budget into efforts to contain the spread of the virus.
Much of the S$800 million, said Mr Heng, will go to the Ministry of Health (MOH).
GST to remain at 7 per cent next year due to current economic conditions — but will increase after by 2025
Mr Heng also said that while the Goods and Services Tax (GST) rate will remain at 7 per cent next year due to current economic conditions, the Government will eventually increase the rate by 2025.
However, he said that the GST hike will still take place by 2025, as Singapore “will not be able to put off the increase indefinitely”.
Mr Heng said that Singapore would require recurrent sources of revenue to fund recurrent spending needs in the medium term.
The COVID-19 outbreak, he added, has also “reinforced the importance of continued investment in our healthcare system, including the capability to deal with outbreaks”.
Mr Heng assured that the Government will give Singaporeans “sufficient lead time”, and will continue to absorb the GST on publicly-subsidised healthcare and education.
The Government, he said, will also introduce a a S$6-billion Assurance Package to reduce the impact of the hike on Singaporeans, which is in tandem with the Government’s previous announcements related to GST hikes.
All adult Singaporeans will receive a cash payout of between S$700 and S$1,600 over five years under the Assurance Package.
Lower-income households will benefit the most from the package, as those living in one-room to three-room HDB flats will receive offsets equivalent to approximately 10 years of additional GST expenses.
“To illustrate, a family of four with a combined income of S$6,000 living in a four-room HDB flat can receive in total about S$7,000 in offsets over five years. This includes cash of about S$4,000,” he said.
Enhancements will also be made to the GST voucher scheme following the GST hike in the future to “fully offset” the GST for the lower half of retiree households, and to “significantly offset” the GST for the upper half of such retiree households.
About half of the GST for lower-income households with no elderly members will also be offset as a result, he said.
“This is the Government’s way of ensuring our system of taxes and transfers remains progressive and supports Singaporeans through the change, while enabling us to fund our future needs in a sustainable way,” said Mr Heng.
