2022 roundup: A Budget for a new way forward, with a larger Assurance Package

In this year-end roundup series, looks back at key moments of 2022.

How do we find our way forward? An important question for any nation’s leaders at any time. And an answer needed more acutely for this uncertain era.

“Sir, this Budget sets out the roadmap for Singapore to adapt and thrive in a post-pandemic world,” said Deputy Prime Minister and Finance Minister Lawrence Wong during his Budget Debate round-up speech in March.

“We are charting our way forward together — towards a fairer, greener and more inclusive society.”

This followed him presenting Budget 2022 to Parliament a fortnight earlier on Feb 18.

Budget 2022, accordingly, put ordinary Singaporeans and our nation’s future, as well as fairer taxes front and centre. And it delayed the full GST hike to 2024.

This while upsizing the Assurance Package by S$640 million to cushion this hike’s impact.

In total, the Assurance Package will reach around S$8 billion, after a S$1.4 billion top up announced by DPM Wong in Nov.

Uplifting lower wage workers

Workfare, the income supplement for lower-wage workers, was made more accessible. Its qualifying income ceiling was raised to S$2500 a month, maximum payouts raised to up to S$4,200 annually and workers as young at 30 can now receive it.

Source: MOF

Progressive Wages featured too. Companies employing foreigners will have to pay all their locals employees at least $1,400 per month. A Progressive Wage Credit Scheme (PWCS) will provide employers with transitional support, with the Government co-funding these wage increases by 15 per cent to 50 per cent until 2026.

These together are a $1.8 billion annual investment for uplifting our hardworking Everyman and Everywoman; Workfare alone benefits over half a million workers.

Seniors also have help for retirement under the Budget with increased employer and employee CPF contribution rates (three to four per cent) for workers aged 55 to 70.

Digital innovation

Singapore needs to stay competitive too in this new world. To this end, the Budget made strengthening our digital capabilities a top priority.

Broadband access speeds will be upgraded tenfold over the next few years, while an extra $200 million will help upskill Singapore’s businesses and workers.

Local innovation got a boost too. There was $25 billion set aside under the Research, Innovation and Enterprise (RIE2025) strategy. And R&D centres will have their capacity increased eightfold This is enough to support close to 2,000 innovation projects across five key pilot sectors: Agri-Tech, Construction, Food Manufacturing, Precision Engineering and Retail.

Concurrently, $35 billion of green bonds will be issued, a higher carbon tax levied and more electric vehicle charging points built in order for Singapore to transition responsibly into the green economy.

Fairer taxes and a delayed GST hike

The DPM outlined the Budget’s “major enhancements to strengthen our tax structure”.

Particularly in areas close to everyone: personal income tax and the GST.

“Where personal income tax is concerned, there is room for greater progressivity, so that those who earn more, contribute more,” said DPM Wong.

Top earners (those making over $1 million annually) will be taxed 24 per cent come 2024. The people directly below (those making between $500,000 to $1 million), 23 per cent.

A wealth tax also featured, with increased rates for investment properties (up to 36 per cent) and a new ARF tier for luxury cars.

The GST hike too, was delayed and staggered; it will only fully increase to 9 per cent in January 2024.

Source: MOF

“Where the timing of GST is concerned, I have carefully considered the overall situation — the ongoing pandemic, the state of our economy, and the outlook for inflation,” explained DPM Wong.

“Our revenue needs are pressing. But I also understand the concerns that Singaporeans have

about the GST increase taking place at the same time as rising prices.”

A larger Assurance Package

So the upsized Assurance Package (not to be conflated with the Support Package) helps.

This meant every adult Singaporean receiving up to $1,600 in cash payouts over the next five years (eligible seniors get a bonus of up to $900). Kids and seniors too will get MediSave top-ups totalling $450.

HDB households get extra U-Save rebates of up to $570 under this package too. And all households are getting $200 worth of CDC vouchers for use at neighbourhood merchants and hawkers as well as major supermarkets in 2023 and 2024.    

In fact, the Government topped up the Assurance Package with another $1.4 billion in November. That’s a total of $8 billion for looking after the needs of Singaporeans.

Stay tuned for Budget 2023 for more details about the top-up.