Budget 2021 – Help through the Pandemic
If you’ve only got a minute:
- Singapore’s 2021 Budget will continue to focus on measures to help families, workers and businesses weather the ongoing pandemic.
- The household support package includes 5 key measures to provide financial support to Singaporean households.
- To cushion the impact of future GST hike, the government has set aside a $6 billion Assurance Package.
Budget 2021, with the theme of Emerging Stronger Together, combines measures to help families, workers and businesses weather the ongoing pandemic and initiatives to invest in Singapore for the long term. Announced by Deputy Prime Minister Heng Swee Keat in February 2021, the $107 billion plan contains an $11 billion Covid-19 Resilience Package that will support a range of initiatives including vouchers for families and extended wage support for pandemic-hit sectors.
Here are the 5 key measures in the Household Support Package and other Budget highlights.
Household support package
Eligible Housing and Development Board (HDB) households will receive a one-off special payment of between $120 and $200 this year. They will also receive Goods and Service Tax (GST) Vouchers and a $100 voucher to be used at participating heartland shops and hawker centres.
1. GST Voucher-Cash Special Payment
Lower and middle-income Singaporeans who qualify for the GST Voucher-Cash will receive an additional one-off GST Voucher-Cash Special Payment of $200. Lower-income Singaporeans will thus receive up to $500 in GST Voucher-Cash this year to help offset daily living expenses.
To qualify for the scheme, individuals must be local citizens aged 21 years and above in 2021 with an assessable income of not more than $28,000 for the Year of Assessment 2020. The annual value of their place of residence as reflected on their NRIC as at Dec 31, 2020 must not be more than $21,000. The individual must also not own more than one property.
2. GST Voucher-U-Save Special Payment
All eligible HDB households will receive an additional 50% of their regular GST Voucher-U-Save this year through a one-off GST Voucher-U-Save Special Payment. This will be credited in April 2021 and July 2021, together with their regular GST Voucher-U-Save. The total amount each household will receive ranges between $355 to $595, depending on the type of HDB flat they live in.
3. Service and conservancy charges rebate
The Government will extend the service and conservancy charges rebate for all eligible HDB households for another year. These eligible households will receive rebates to offset between 1.5 and 3.5 months of service and conservancy charges over the financial year of 2021. This scheme will benefit about 950,000 Singaporean households.
Households will receive their rebate over 4 quarters in April, July, October 2021 and January 2022.
4. Top-ups to Child Development Account, Edusave Account and Post-Secondary Education Account
Families with Singaporean children below 21 years old will receive an additional top-up of $200 per child through the Child Development Account (CDA), Edusave Account or Post-Secondary Education Account. The top-ups will benefit about 780,000 children.
5. Community Development Council Voucher Scheme
All Singaporean households will receive $100 worth of vouchers each to be used at participating heartland shops and hawker centres. This was a move to support local heartland businesses and hawkers. The Government will partner with the Community Development Councils (CDCs) to disburse the vouchers. The scheme will benefit about 1.3 million Singaporean households.
Petrol duties hike
Petrol duties were raised for the first time since 2015. The move aims to encourage less car usage as part of Singapore’s broader sustainability push and reduce carbon emissions.
Duty for premium grade petrol will be raised to 79 cents a litre, up by 15 cents a litre or a 23% hike. The duty for intermediate grade petrol will be raised to 66 cents a litre, up 10 cents per litre or 18%. To cushion the hike, rebates will be given for petrol and petrol-hybrid vehicles. For instance, cars using petrol will be given a one-year tax rebate of 15%.
Impending GST hikes between 2022-2025
Although there won’t be any increase in GST in 2021, DPM Heng announced that the increase will have to be implemented sometime between 2022 and 2025. The increase in GST from the 7% to 9% is unavoidable as it will serve as a source of funding for rising costs, especially in healthcare expenditure for an ageing population.
To cushion the impact of the GST hike, the government has set aside a $6 billion Assurance Package. This means all adult Singaporeans will get cash pay-outs of between $700 and $1,600 over 5 years, estimated to offset at least 5 years' worth of additional GST expenses for each household.
For lower income families living in 1 to 3 room flats, the amount received will be enough to offset about 10 years' worth of GST expenses.
GST on low-value imports from 2023
To help level the playing field for local businesses to compete effectively, low-value goods bought online and imported by air or post will be subject to GST from 1 January 2023.
Presently, such goods that are worth $400 or less, and imported via air or post are not subject to GST to facilitate clearance at the border, but the tax is paid on these goods bought here. All goods imported via land or sea are already taxed, regardless of value.
To encourage charitable giving, the 250% tax deduction for donations will be extended by 2 years. In addition, $20 million will be set aside for a new Change for Charity Grant to match donations raised by businesses that encourage consumers to donate while making purchases.
The Covid-19 recovery will be long-drawn, and Singapore’s economic recovery largely depends on how the global situation plays out. As such, it is prudent for Singaporeans to set aside adequate emergency cash, make their money work harder and adopt a long-term financial planning mindset.
DBS digibank is an enabler for both first timers and savvy retail investors to better navigate their journey to achieve financial freedom. Use the “Plan” tab to help you monitor your cashflows, identify financial gaps, gain customised tips and access to insurance and investments.
Map out your future retirement income streams using your finances within and outside DBS, and in government schemes like the Central Provident Fund and Supplementary Retirement Scheme.
Check out the articles in the Budget 2020 series:Article 1: Budget 2020 – Boosting financial health
Article 2: Fortitude Budget 2020
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This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability.
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