SINGAPORE: Finance Minister Lawrence Wong said on Friday that Singapore must renew and strengthen its social compact for a post-pandemic world, as he outlined significant changes to Singapore’s tax system.
Outlining the challenges facing the country, he said Singapore is entering a future where conditions are more volatile, the global environment more unpredictable and change more fast-paced than ever. “The changes brought about by the pandemic, rising geopolitical contestation, climate change, as well as domestic issues like our rapidly ageing society – these are the defining challenges of our time,” said the Finance Minister. “They call for robust policy responses to reinforce our resilience and retool our capabilities for the future.”
About 80 per cent of this is funded by taxes, while the remaining 20 per cent is from Net Investment Returns Contribution . NIRC is a continuing stream of income from long-term expected returns generated by Singapore’s reserves and up to 50 per cent can be used by the Government. Mr Wong assured Singaporeans that in the next decade, Singapore will “invest even more” its people and social infrastructure, and strengthen its system of “collective risk sharing”.
By 2030, government expenditure is expected to rise to more than 20 per cent of GDP, most of which will go to healthcare. There will not be enough revenue to cover these additional spending needs, as Singapore’s slowing labour force and GDP growth will constrain tax revenues. This is why the tax system has to be adjusted, he said.
“Wealth taxes are therefore needed to build a fairer society where everyone can aspire to succeed regardless of their backgrounds.” For owner-occupied properties, the rates for homes with an annual value above S$30,000 will go up from today’s 4 to 16 per cent, to 6 to 32 per cent. This will affect the top 7 per cent of owner-occupied homes.Luxury cars will also be taxed at a higher rate, with an new Additional Registration Fee tier for cars above S$80,000 in open market value. These luxury cars will be taxed at a rate of 220 per cent.
- There will be additional cash payouts of S$600 to S$900 for less well-off Singaporean seniors from 2023 to 2025- Singaporeans aged 20 and below or 55 years and above will get a MediSave top-up of S$450 in total over 2023 to 2025The Government will also top up funds to Comcare and self-help groups to support vulnerable households. The permanent GST Voucher scheme is also to be enhanced with a higher income threshold for the cash payouts and a larger quantum of up to S$500.
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