Singapore Budget 2013: All you need to know

FY 2013 Overall Budget Balance is projected to be a surplus of $2.4 billion or 0.7% of GDP.

• FY2012 budget surplus higher at $3.9b. This is due to stamp duty and motor vehicle taxes.
• Budget 2013 to have a surplus exceeding estimates a year ago ($1.3b or 0.4% of GDP). This year, the government expects a surplus of $3.9b or 1.1% of GDP. It's a short-term increase in revenues which we don't expect to be sustained.
• Household incomes have risen. Adjusted for inflation, the median SG household income per member grew by 14% over last 5 years.
• Workers in the lower ladder - security guards, cleaners, etc - had little or no rise in incomes over 5 years. But the schemes under Budget 2013 will help ensure that they will have increase, through programs like the Progressive Wage Model.
• Singaporeans want a home with a strong Singaporean identity and sense of belonging, strong and robust economy, strong families where seniors can age with dignity, society that takes care of the disadvantaged -- according to Singapore conversation platforms
• Bus capacity will be ramped up.
• New lines will start operating and new trains will be added to existing lines
• Government will reduce the cost of household relative to income of young Singaporeans. HDB prices have been rising rapidly since 2009. 
• "We have not yet achieved the level of productivity and income of a developed economy," DPM Tharman said.
• Singapore needs to intensify restructuring of our economy and employment market to achieve quality growth and higher wages for S'poreans.
• Government to intensify economic restructuring and skills upgrading, including tightening foreign worker inflows.
• Flexible work practices must become more common -- for better worklife balance. Singaporeans should be working from smart work centers near homes like in Amsterdam and Seoul.
• "We're moving to a more progressive fiscal system, by tilting taxes and benefits in favour of lower- and middle-income groups," DPM Tharman said.
• New Wage Credit Scheme (WCS) to encourage employers to increase the pay of their employees
• PWD Singaporeans to recieve more support through special employment credit
• Older Singaporeans can receive subsidies of $870 per month for home base care
• Budget 2013 will strengthen social mobility. Low wage earners above 55 years old will get top up of his pay by 30%.
• A young low income couple with 2 children to receive more than $600,000 in benefits in real terms over the course of the household’s lifetime. This comes from subsidies in a range of areas - education, GST voucher, etc. taking into account taxes, they will get back far more in benefits -- more than $5 in benefits for every dollar of taxes paid.
• Over 5 years, government will invest 30% more in sports and more than double its investment to create regional sports facilities.
• 1st thrust of the budget: to intensify effort to achieve quality growth driven by sustained productivity improvement
• In 1980, Singapore's productivity is 1/3 of the most advanced countries. Now, after 3 decades, it's 70% of the countries like US. SG's overall productivity level is now above Hong Kong's 
• Action plans: 1. catch up from a decade of slow productivity growth; 2. catch up with global leaders in each sector; 3. reduce wide gap in efficiency in diff economy sectors in particular, manufacturing and construction sector
• "The 2-3% per annum target for productivity growth is ambitious but we must make every effort to achieve it. that will bring us, at the end of this decade, much closer to the most advanced economies of today," DPM Tharman said.
• The increase in foreign workers slowed in 2012 to 67,000.
• Most of growth in foreign workers was in construction and services sector. Foreign workers in the manufacturing sector declined in 2012.
• Foreign workers strategy: 33.6% of total workforce are foreigners.
• The Construction and Process industries accounted for about half of the total increase in foreign workforce.
• There has been continued rapid growth of S Pass employees in Services sector
• Total no. of Employment Pass (EP) holders declined last year, as a result of the tightening of MOM's eligibility criteria.
• There will be a continued moderation of foreign workforce growth, but these will not be across the board.
• Proportion of foreign workers to the total workforce should not increase indefinitely.
• Foreign workers strategy: 1. make selective ceiling cuts for sectors where there are significant growth in foreigners; 2. increase levies for all sectors to ensure greater productivity. levies will be sharper for companies with high dependency on foreign workers; 3. encourage companies to develop Signaporean workers and reward them fairly
• Increase levies for all sectors to ensure businesses reduce dependence on foreign manpower and improve productivity
• Construction, Marine and Process industries are most dependent on foreign workers lag behind international standards of productivity
• Services industries like F&B and Retail that rely most on foreign workers have low pay and low-wage growth for local workers. 
• F&B workforce increased by 1/3 over the last 5 years with foreign workers making up over half of the increase. Many firms find it increasingly difficult to attract local workers.
• Economic restructuring must result in a "dynamic and re-energised SME scene"
• Firms have to respond in new ways to the tight labour market
• Quality Growth Programme to help businesses upgrade, create better jobs and raise wages: Pillar 1: Tightening Foreign Worker Policies through a targeted approach.
• Pillar 2: A 3-Year, Transition Support Package to support companies during this period of restructuring.
• Pillar 3: Strengthening of Productivity Incentives to help companies improve productivity, and make it easier to tap on them
• Pillar 4: Develop new capabilities for Asia's rapidly growing economies
• Foreign Worker Levies will be raised across the board for all sectors in 2014 & 2015
• Levy rates for less skilled Work Permit Holders in Construction Sector will increase by $150 between Jul 2013 and Jul 2015.
• There'll be steeper levy increases of $300 for workers hired outside a company’s Man-Year Entitlement or MYE
• Overall DRC in services sector will be reduced from 45% to 40%, and lower S Pass Sub-DRC from 20% to 15%.
• EDP and SPRING to work together to upgrade productivity
• Minimum S Pass qualifying monthly salary will be increased from $2k to $2.2k starting 1 July 2013.
• Tiered salary system based on age and qualification will be introduced to level the playing field for S-Pass and local workers 
• MOM will continue to tighten eligibility requirements for EP workforce, especially for Q1 pass holders. 
• MOM will launch a framework to ensure firms get fair consideration in their hiring processes. MoM will consult with all stakeholders to develop the framework.
• Under the wage credit scheme/WCS, Government will co-fund 40% of wage increases for Singaporean employees over the next 3 years. 
• The scheme cost govt $3.6b over three years
• Government to reveal a special PIC Bonus for YA2013 to YA2015s
• Businesses that invest $5000 will get a dollar for dollar matching cash bonus of up to $15000 over 3 years of assessment.
• There will be a rebate of 30% of tax payable up to $30,000 per year of assessment. This will cost the govt $1.3b over 3 years
• 1-year 30% road tax rebate for taxis, etc from 1 July 2015. will save businesses $46m
• Firms that renew commercial vehicle COEs for 5 years can extend their COEs for another 5 years after that
• Significant enhancement of the productivity incentives over 3 years costing $500m
• Land Productivity Grant to support coys which intensify land use or relocate some operations to immediate region
• Governement support schemes for SMEs will be more accessible.
• Government targets to reduce costs, develop economies of scale, and raise productivity and wages in link with businesses 
• EDB targets $500m support for Future of Manufacturing plan over next 5 years. 
• A $90m Satellite Industry Development Fund is under way for the emerging satellite industry in Singapore
• There will be a start-up tax exemption
• Investment holding companies or property developing companies incorporated after today will be excluded from startup tax exemption. These companies can still enjoy the partial tax exemption available to other companies.
• Key concern is income inequality
• 2nd Budget thrust: More inclusive society
• Social mobility must be intensified
• 4 PILLARS of social strategies:
  1 promote social mobility. start from preschool level to support children as they grow up
  2 provide job opportunities and income growth to Singaporeans
  3 redistribute to benefit lower and middle income groups. sustain a better system of taxes. govt will cushion the impact of rising costs to Singaporeans
  4 provide strong support for community initiatives by partnering with groups
• Government will more than double spending on preschool by over $3b over the next 5 years for preschools to be available closer to homes.
• MOE will also set up a few kindergarten development centres.
• $72m to be shelled out for students' Opportunity Fund which will be extended to polytechnics.
• School level initiatives: 1 extend learning support program beyond the early primary school years. will require 600 additional teachers who will be specially trained; 2 expand number of school based care centers outside school hours; 3 MOE will develop richer instruction materials to enhance teaching and learning in every school. Online resources on difficult concepts will be available.
• These initiatives will cost $120m each year. There will be an additional $72m for opportunity fund -- $275,000 for secondary school and $150,000 for primary school. opportunity fund will be extended to polytechnics. in total, 100,000 students will benefit from this.
• WIS payouts to increase between 25% to 50% in maximum payouts
• Workers will receive 40% of WIS in cash as compared to 29%
• "Those who live in the more expensive homes should pay higher taxes," DPM Tharman said.
• In addition to the 0%, 4%, and 6% tax rates, new property tax rates of between 8% to 16% will be added.
• Government will increase tax rates for high end investment properties. Currently, tax rate is flat at 10%. New marginal tax rates of up to 20% will be introduced.
• Suburban condo will have $300 per year increase in tax while high end property with annual value of 150k will have $9k per year tax hike
• Revised tax rates will be applied 1 January 2015
• A tiered Additional Registration Fee (ARF) structure will be introduced for passenger cars and taxis.
• 3 tiers are 100%, 140% and 180% of OMV
• Medifund to be topped up
• Government will expand seniors mobility fund into a seniors' mobility and enabling fund. Subsidies of up to 80% to the lower income elderly for their consumables. 
• Additional $10m grant to the Self-Help Groups to help them enhance their programmes over the next two years.
• Social service delivery initiatives revealed
• 1 put up 20 more social services offices
  2 integrate elderly care services from CEL and AIC
  3 MSF iwll strengthen focus on PWD with agency dedicated to the disabled
• Income tax rebate of 30% subject to a cap of $1.5k for resident individual taxpayers who are below 60 years old
• Higher rebate of 50% subject to the same $1.5k cap for those aged 60 years and above
• Concessionary foreign domestic worker levy will be cut from $170 to $120 per month.
• A basic surplus of $0.3b for FY2013 can be expected
• The Overall Budget Balance for FY2013 is projected to be a surplus of $2.4 billion (0.7% of GDP).
• $3bn top-up for GST Voucher Fund to ensure sufficient funds for Government to make yearly payouts up to FY2020.