Singapore sees 2018/19 overall budget deficit of 0.1 percent of GDP

  • The overall budget deficit for the 2018/19 fiscal year starting on April 1 is expected to be S$0.6 billion.
Getty Images

Singapore's government expects an overall budget deficit of 0.1 percent of gross domestic product for the coming fiscal year, Finance Minister Heng Swee Keat told parliament on Monday.

The overall budget deficit for the 2018/19 fiscal year starting on April 1 is expected to be S$0.6 billion, Heng said.

For the 2017/18 fiscal year, the government expects an overall budget surplus of S$9.6 billion or 2.1 percent of GDP, larger than the forecast made a year earlier for a surplus of S$1.9 billion or 0.4 percent of GDP, he added.

The budget statement comes after Singapore's trade-reliant economy recorded full-year growth of 3.6 percent in 2017, the highest in three years.

The following are some highlights of Singapore's budget proposals for the fiscal year that

begins April 1.

Taxes

  • Singapore's good and services and taxes (GST) to be increased by 2 percentage points, from 7 pct to 9 pct and will be implemented sometime from 2021 to 2025. Heng said that it is likely to be implemented earlier rather than later in that period.
  • Singapore introduced a new GST on business-to-business and business-to-consumers imported services which will not affect e-commerce for goods. The GST does not apply if an overseas supplier does not have an establishment here. More detail will be released by the end of this month.
  • Singapore will raise its corporate income tax rebate to 40 percent of tax payable, capped at S$15,000 ($11,441). It will extend the corporate tax rebate to 2019, at a rate of 20 percent of tax payable, capped at S$10,000.
  • Carbon tax, which will be implemented in 2019, will stand at S$5 per tonne of greenhouse gas emissions from 2019 to 2023. It will be reviewed by 2023, and is planned to be increased to S$10-S$15 per tonne by 2030. Singapore expects to collect S$1 billion worth of carbon tax in the first five years.

Foreign worker levy

  • Singapore will defer earlier announced increases in foreign worker levy rates for another year for marine shipyard and process sectors.

Infrastructure

  • Singapore increased its infrastructure spending from S$8.5 billion in 2011 to an estimated S$20.0 billion in 2018.
  • Similar to the Changi Airport Development Fund in 2015, Singapore will set up a new Rail Infrastructure Fund to save up for major rail lines, which starts with an injection of S$5 billion in fiscal 2018.