Highlights of S'pore's 2008/09 budget
FOLLOWING are the highlights of Singapore's 2008/09 budget delivered by Finance Minister Tharman Shanmugaratnam in Parliament on Friday.
KEY POINTS:-
Singapore 2007/08 budget surplus at S$6.4 billion.
- Manufacturing investment likely S$16 billion in 2008.
- Rising cost of living a major concern.
- There is limit on Singapore dollar appreciation.
- To adjust tax policies to stay competitive.
- Research spending to be increased to S$7.5 billion by 2010.
- Tax deductions for R&D to rise to 150 percent from 100 percent.
- To keep business cost competitive against other cities.
- To defer another S$1 billion of public construction projects.
- Corporate tax rate of 18 per cent is competitive.
- To introduce tax incentives for family-owned holdings and insurance brokers
- To drop estate duty immediately.
- No cut in personal income tax this year.
- Grants 20 percent income tax rebate capped at S$2,000.
- To tax all alcoholic beverages based on alcohol content.
- Expects 2008/09 budget deficit of S$0.8 billion.
FINANCE MINISTER'S COMMENTS ON INVESTMENT'
Our pipeline of manufacturing investments remains robust with EDB (Economic Development Board) expecting S$16 billion worth of investment commitments this year, on top of the same volume last year.'
ON INFLATION'
We seek to moderate imported inflation through our Singapore dollar exchange rate policy. There is a limit to how fast the Singapore dollar can appreciate without hurting our economic performance and growth, and eventually causing wages to fall. An overly strong Singapore dollar can bring inflation down, but at the cost of lower growth and higher unemployment. This is why, while we can mitigate imported inflation through MAS's exchange rate policy, we cannot insulate ourselves completely from the effects of global inflation.'
ON COMPETITIVENESS
'We will also adjust our tax policies so that we stay competitive, support the growth of our SMEs, encourage risk-taking as well as strengthen our role as a financial and business hub.'
ON RESEARCH SPENDING
'We will increase our overall research spending to S$7.5 billion by 2010, or three percent of the GDP, with one-third of this being publicly funded research.'
ON R&D INCENTIVES
'I will increase the tax deductions allowed for R&D done in Singapore from 100 percent to 150 percent. This enhanced decision means that for every S$100,000 of local spending, a company will be able to deduct S$150,000 from its taxable income.'
ON BUSINESS COST
'We have to keep our business costs competitive, and not let them run ahead of the cities we are competing with.'
ON PUBLIC CONSTRUCTION PROJECTS
'The combination of higher raw material prices and work on major new projects such as two integrated resorts and petrochemical plants has caused costs to spike up. To ease the pressure, the government has earlier announced the deferment of some S$2 billion worth of government projecst. We have now decided to defer another close to S$1 billion of projects. This deferment will only affect projects which are less urgent'
ON COPORATE TAX
'With our 18 percent corporate tax rate and the enhancements we have made to our partial tax exemption scheme last year, our corporate tax regime is competitive.'
ON FAMILY-OWNED HOLDINGS INSURANCE BROKERS'
I will introduce a tax incentive scheme for family-owned investment holding companies. The scheme will allow these companies to enjoy the same scope of exemptions that individuals currently enjoy on Singapore and foreign-sourced investment income.
'I will introduce a tax incentive scheme for licensed insurance and reinsurance brokers. They will be taxed at a concessionary rate of 10 per cent on the income they derive from offering insurance broking and advisory services to offshore clients.'
ON ESTATE DUTY'
I have therefore decided to remove estate duty from our tax regime, with effect from today. It is not just a practical or expedient measure, but one that on balance will be in our collective interest.'
ON PERSONAL INCOME TAX'
We will not be making any further move on personal income tax rates this year. But we will continue to watch this and ensure that we are always able to attract and keep talent in Singapore, including those at the top end.'
'I will give an income tax rebate of 20 percent for all resident taxpayers for year of assessment 2008.'
ON ALCOHOL TAX
'With effect from today, all alcoholic beverages will be taxed on the basis of their alcoholic content.'
ON BUDGET DEFICIT
The net effect of these additions is to bring the overall budget balance for financial year 2008 to a deficit of S$0.8 billion.'
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