Tuesday, 26 February 2013

Budget 2013: A Better Singapore








Budget for 'a better Singapore'
Tharman spells out steps to pursue quality growth, foster inclusive society
By Aaron Low, The Straits Times, 26 Feb 2013

 THE Government rolled out one of the most generous Budgets in recent years yesterday, balanced finely between helping firms raise their game and ensuring that individuals get the help they need.

Businesses will get a $5.9 billion boost, including an unprecedented scheme which will see the Government covering two-fifths of pay rises given over the next three years to Singaporeans earning $4,000 monthly or less.

Employers and experts welcomed this move, saying it will encourage businesses to pay local workers more in a tight labour market as they upgrade. Some said it will also encourage firms to hire more Singaporeans.

The Budget had help for individuals and families too, especially the poor. They will get $1.7 billion in financial aid, in the form of GST vouchers, conservancy rebates and Medisave top-ups, to help them cope with rising costs.

At the same time, the better off will be taxed more for high-end homes, cars and investment properties.

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam unveiled Budget 2013 in a two-hour speech in Parliament, staying focused on the twin elements of economic restructuring and continuing to build an inclusive society.

As he put it: "This Budget is for a better Singapore."


 And he spelt out what it was all in aid of: quality growth achieved mainly through innovation and higher productivity, and growth that would provide better lives for all Singaporeans - children, working families, the elderly and the disabled.

There will be pain as the economy restructures, and he did not hold back on announcing further curbs on foreign workers, pressing on with a move begun three years ago.

Pressing on with measures to discourage a reliance on cheap foreign labour, he raised levies across the board, slashed quotas in the marine and services sectors, and raised salary requirements for mid-skilled foreign workers.

Mr Tharman stressed that the push to restructure the economy - with higher productivity the "most important economic priority" - is linked inextricably to the aim of creating an inclusive society.
He acknowledged that many lower-paid Singaporean workers have seen little or no improvement in real income over the past five years.

Still, real median incomes for Singaporean households have risen faster than for their counterparts in Hong Kong, Taiwan and South Korea, the result of a competitive world economy.

To help lower-paid Singaporeans earn more, the Government will pick up the tab for 40 per cent of all pay rises they receive over the next three years.

The measure is aimed at encouraging employers to share productivity gains with workers, which would help them cope with rising costs.

In other areas, Mr Tharman set aside $3 billion to raise the number and quality of pre-school centres, with a new government agency to drive improvements.

To ease worries over rising health-care costs, he promised that the Government will shoulder a larger share of costs while broadening insurance coverage.

There are also more plans to grow Singapore's expertise in advanced manufacturing, in areas such as robotics and 3-D manufacturing, as well as develop its capabilities regarding satellites.

Analysts and businesses said the Budget 2013 was generous even as it showed the Government's commitment to raising productivity. They also noted a clear shift towards giving even more help to the lower-income while taxing the rich.

Said PricewaterhouseCoopers tax partner David Sandison: "Few would argue that this Budget did not contain brave and honest recognition of at least some of the challenges Singapore faces if it is to meet the social demands of the population and its economic growth targets."



TRANSFORMING ECONOMY AND SOCIETY

This Budget is for a better Singapore. We will fix our problems in housing and transport. We are transforming our economy so that we can have quality growth - growth that will provide all Singaporeans a better quality of life. And we are taking further steps towards a more inclusive society - starting with our children, helping lower-income workers, and providing better lives for our retirees.

 - Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam








Govt's immediate priority is to solve housing & transport issues: PM Lee
Channel NewsAsia, 26 Feb 2013

Prime Minister Lee Hsien Loong said the government's immediate priority is to solve the country's housing and transport issues, while at the same time, Singapore must upgrade its economy through productivity and innovation.

Mr Lee, who shared his thoughts on his Facebook page on the new Budget presented by Finance Minister Tharman Shanmugaratnam on Monday, said Budget 2013 will help businesses cope with much lower foreign worker growth over the next few years.

It also has schemes for every Singaporean to benefit from growth.

For example, the Wage Credit Scheme will serve as an incentive for employers to raise the pay of lower-income workers, as the government will pay 40 per cent of these increases for three years.

Mr Lee pointed out that Budget 2013 will also focus on promoting social mobility, especially through education.




Singapore will remain an attractive place to do business: S Iswaran
Channel NewsAsia, 26 Feb 2013

The Second Minister for Trade and Industry S Iswaran has said tighter foreign worker policies announced in Monday’s budget don’t detract from Singapore attractiveness as a place to do business.

He said Singapore will retain its competitive edge even with moves to make it more expensive to hire foreign labour.

Mr Iswaran, who is also Minister in the Prime Minister’s Office, was speaking to reporters on the sidelines of Mediacorp’s Tamil Budget Forum.

He said moderating foreign manpower was a complement to growing the local workforce, and channelling resources to the most productive areas.

He reiterated that businesses had to move up the value chain to achieve sustainable, high quality growth.

“We are well placed to be a part of this and Singapore, we in turn also has very strong competitive advantages in terms of our infrastructure, our business services and our legal and corporate environment. When you take this together, we remain a compelling business destination but we have to make this economic transformation and our businesses have to make this adjustment,” he said.

Mr Iswaran adds that workers will also have to adapt and enhance their skills to do more productive work.





HOUSEHOLDS
$1.7b worth of rebates, help for families
By Rachel Chang, The Straits Times, 26 Feb 2013

TO HELP households cope with the rising cost of living, the Government will shell out about $1.7 billion in grants and rebates this year.

The bulk of this will come from personal income tax rebates and a doubling of the amount families receive to offset what they pay in goods and services tax (GST).

The Government will also lower the concessionary maid levy for families with elderly, young or special-needs dependants from next month - by $50 a month, to $120.

Deputy Prime Minister Tharman Shanmugaratnam said yesterday that while raising incomes is the best way to help lower- and middle-income Singaporeans cope with the rising cost of living, the 2013 Budget also wants to help ease the pressures they are facing "more immediately".

The most significant handouts will go to older Singaporeans, such as a one-off $200 Medisave top-up for all citizens aged 45 years old and above. This will benefit 1.5 million Singaporeans and cost $300 million.

What low- and middle-income families get from the GST Voucher scheme, introduced and entrenched last year, will be boosted this year to the tune of an additional $680 million.

This "extra" GST Voucher for this year will essentially mean that all eligible Singaporeans get double the amount in vouchers - made up of cash, Medisave top-ups and utilities rebates - than what they received last year.

In addition, the $3.6 billion fund for the GST Voucher scheme will be topped up by another $3 billion, which will ensure that the yearly vouchers will be given out until at least 2020 - regardless of the Government's fiscal position.

Households will further benefit from personal income tax and service and conservancy charge (SCC) rebates. Those in one- and two-room flats will get three months' worth of SCC rebates, while those in three- and four-room flats will get two months' worth. Those in five-room flats get 1.5 months' worth, and those in executive flats get one month's worth.

The personal income tax rebate will be 30 per cent, subject to a cap of $1,500, for taxpayers below 60 years old. This grows to 50 per cent for those 60 years old and above.

Altogether, the $615 million worth of tax rebates will benefit 1.3 million resident taxpayers. Mr Tharman said this slew of "direct assistance measures" will total $1,500 for a typical middle-income family living in a four-room flat. This is made up of $530 in special transfers, $730 in tax savings and the rest in GST vouchers.

A typical retiree couple in a three-room flat will benefit even more, receiving $1,800 in special transfers and tax savings. With the GST Voucher, this grows to over $3,000, of which $1,400 goes into their Medisave accounts to help with health-care costs.

Nominated MP and unionist Mary Liew especially welcomed the doubling in GST Voucher amounts: "It is something that low-income families really look forward to," she said.

People's Action Party MP Denise Phua said each measure could be further enhanced. For example, families with disabled or elderly dependants would want the maid levy waived altogether. "But taken as a total package, the assistance this year is not insubstantial."





WORKFARE
Higher payouts and more to be covered
By Toh Yong Chuan, The Straits Times, 26 Feb 2013

THE Workfare scheme will be expanded to cover more workers and give higher payouts, as the Government moves to boost a programme that has become one of the key pillars of its social policy.

Another 40,000 Singaporean workers will now come under the scheme after the monthly income ceiling of Workfare was raised from $1,700 to $1,900 yesterday.

This brings the number of workers benefiting from the Workfare Income Supplement scheme to 480,000 - roughly one in three members of the workforce.

Besides covering more workers, payments will also go up. For example, a 60-year-old cleaner who earns $1,000 a month will get $3,500 in Workfare this year, up from $2,800. This is a boost equivalent to 3.5 months of additional income, said Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam.

Workers will start receiving the higher payouts from June.

Workfare was introduced in 2007 to boost the income of low-wage workers by giving them a wage supplement if they earn below a certain monthly salary.

This is because the income of low-wage workers has generally risen at a slower pace than others.

The monthly salary cap was last raised in 2010 from $1,500 to $1,700. This year's further enhancements will cost the Government about $650 million, up about 44 per cent from what it spent on the scheme last year.

The changes are part of the aim of social redistribution to benefit lower- and middle-income groups, Mr Tharman said. "We must maintain a progressive system of taxes and benefits and preserve a sense of fairness, even as we ensure that our economy remains competitive."

Aside from raising the Workfare quantum, workers will also receive a larger proportion of the payouts in cash. Forty per cent of what they receive will now be in cash, up from 29 per cent. The rest goes into their Central Provident Fund (CPF) accounts.

The higher Workfare payouts, and the fact that more will be paid in cash, will enable the Government to raise workers' and employers' CPF contribution rates from January next year without cutting take-home pay, he added.

CPF rates for low-wage workers were cut in 2007 to boost their take-home pay, but it raised concerns that the workers may not have enough for retirement.

Mr Tharman also announced that the Workfare Training Support scheme, which provides training subsidies to low-wage workers and their employers, will also be enhanced. The Manpower Ministry is expected to announce details when the ministry's Budget is debated next month.

One of those looking forward to the higher Workfare ceiling is 38-year-old Mohammad Saat, a guard with security firm Soverus. His monthly pay was $1,690 last year and he got a raise to $1,800 this year. He would no longer be eligible for Workfare had the ceiling not been raised. "I will use the extra cash for household expenses and save for my Primary 2 son's education. And I will continue to work hard of course," he said.





Low-wage workers' CPF contribution rates to be raised
But with more Workfare payouts, take-home pay should not be cut
By Janice Heng, The Straits Times, 26 Feb 2013


But this should not reduce take-home pay for most of them, said Deputy Prime Minister Tharman Shanmugaratnam. This is because such workers will get more in Workfare payouts.

Currently, workers earning less than $1,500 a month have lower CPF contribution rates than workers who earn more.

Their contribution rates were lowered in 2007 to make them more employable. But since then, schemes such as the Workfare Training Support have improved their employability, said Mr Tharman yesterday.

From Jan 1 next year, employers' contributions for these workers will be restored to the same level as higher-income workers'.

Employee contribution rates will also approach regular levels, though those earning below $500 still will not need to contribute.

The contributions of those earning between $500 and $750 will be brought closer to those of higher- wage workers.

Contribution rates for those earning above $750 will also be restored to the same level as that of other workers.

Mr Tharman gave the hypothetical example of a 45-year-old worker earning $800 a month.

His employer contribution rate would now be just below 11 per cent, and his employee contribution rate, 16.5 per cent.

These will rise to 16 per cent and 20 per cent respectively.

"He will now save $15,000 more in his CPF by age 65," said Mr Tharman.

The increase in employer contributions is expected to cost firms $83 million next year.

Mr Milton Ng, director of Ramky Cleantech Services, said many in the cleaning industry are older workers with lower CPF contribution rates, so the rate increase may not be "a major problem".

The increased CPF savings will help the workers with their retirement and medical needs.

MP Zainal Sapari, who heads the National Trades Union Congress (NTUC) unit overseeing low-wage workers, said the change should not hurt workers' employability, as there are wage subsidy schemes such as the Special Employment Credit.

On Facebook, NTUC deputy secretary-general Heng Chee How cheered the move, saying that with a "big boost" to Workfare, "low wage workers' take home pay will be protected while their CPF savings rise!"

Medisave contribution rates will also be raised for the self-employed. Those earning $6,000 to $12,000 a year will have to contribute half as much as workers of a similar age, up from a third now.

Above that, contribution rates will vary from half the full rate for those earning $12,000, to the full rate for those earning $18,000.





COMPANIES
$5.9b to spur upgrade, raise wages for workers
By Yasmine Yahya, The Straits Times, 26 Feb 2013

GIVE a worker a pay rise, and the Government will cover two-fifths of his increment. Not just this year, but for the next two years as well.

The new Wage Credit Scheme will do just that, encouraging employers to reward Singaporean workers even as they restructure operations in a tight labour market.

The Government will spend $3.6 billion over the next three years to cover 40 per cent of wage increases given to Singaporeans earning a gross monthly wage of $4,000 or less.

This is part of a Quality Growth Programme, which will see the Government spending a total of $5.9 billion to spur businesses to upgrade, create better jobs and raise wages, while making do with fewer foreign workers.

The Wage Credit Scheme promises to be a key support to employers who need not even apply to receive it - wage credits will be paid to them automatically each year.

Foreign worker levies will also go up across the board, but Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said the Government will not keep the additional revenue.

For the next three years, all additional levies collected will be channelled back to helping businesses upgrade and share productivity gains with their workers.

At the same time, a more targeted approach will be taken to tighten foreign worker supply in sectors such as services, marine and construction to prod them towards more productivity measures. Dependency Ratio Ceilings for the services and marine sectors will be tightened, while construction firms will face increased levies for less-skilled work permit holders. The minimum S Pass qualifying pay will be raised from $2,000 to $2,200 in all sectors.

On the productivity front, the existing Productivity and Innovation Credit (PIC) scheme, meant to encourage companies to invest more in productivity improvements, has a new cash reward for those that do so.

Businesses that spend at least $5,000 in a year on those efforts will receive a dollar-for-dollar matching cash bonus of up to $15,000 over the next three years.

Mr Tharman expected many firms to benefit from the bonus and said small businesses should be encouraged to undertake meaningful productivity investments.

Explaining the move, he noted that workers on the lower rungs of the income ladder, especially cleaners, waiters and security guards, have not fared as well as others in society. "These jobs should be paid better, and our schemes will ensure that they are," he said, adding that raising their wages and boosting productivity would help workers and firms cope with rising costs.

Businesses have also been complaining about other cost pressures such as higher rentals. To help them, Mr Tharman announced a corporate income tax rebate of 30 per cent, capped at $30,000 per year, over the next three years.

Other measures will mean cost savings for owners of commercial vehicles, buses and taxis too.

The Government will also support initiatives by firms collaborating within their industry or working with public sector institutions to develop productivity solutions.

A $100 million Collaborative Industry Projects initiative, for example, will help firms to form consortia to develop solutions for challenges specific to particular sectors such as food manufacturing, retail and social services.

A new Land Productivity Grant will support firms relocating overseas while maintaining core operations here, or those that are intensifying their use of land, leading to savings of at least 0.1ha here.

"It's really not bad," said KPMG tax partner Chiu Wu Hong. "With the levy hikes and curbs in manpower, companies will need all the help they can get, and I thought the package was quite generous."

Indeed, several analysts noted that while it dangled these carrots to encourage firms to work on productivity, the Government continued to press on with the tightening of its foreign worker policies.

These foreign worker measures are "painful but necessary", Mr Tharman said, adding that they are aimed at improving productivity by reducing overall reliance on manpower, not merely replacing foreign workers with locals.





Govt to help pay for salary rises for three years
By Alvin Foo, The Straits Times, 26 Feb 2013


A NEW government scheme to cover 40 per cent of the pay rises Singaporean workers receive over the next three years was welcomed yesterday by employers, who called it generous.

Experts said the Wage Credit Scheme will prove most beneficial for those in the labour-intensive services sector.

To spur employers to share productivity gains with their workers, businesses will get $3.6 billion in government support over the next three years to help them raise wages.

The money will help cover the pay rises of workers earning a gross monthly salary of up to $4,000, and the scheme will be hassle-free - employers will not even have to apply for it.

Announced by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam yesterday, it is part of the Budget's quality growth programme to help businesses upgrade, create better jobs and boost wages.

It is part of a three-year transition support package to help companies restructure in a tight labour market.

Under the scheme, any pay rise a worker gets over his wage in the preceding year will be subsidised between this year and 2015. The co-funding will apply for the full period.

For example, if a worker's monthly pay is raised by $200 this year, the Government will pay 40 per cent, or $80, not just this year but also for the next two.

And if the same worker gets a pay rise of $200 next year and again in 2015, the Government will subsidise 40 per cent of those increases as well.

That means it will cover $80 a month this year, $160 a month next year and $240 a month in 2015.

There is no need for employers to apply for the scheme and the wage credits will be paid to them automatically yearly.

The first payout will be in the second quarter of next year and the final one in 2016.

The move was welcomed by companies, especially small and medium-sized enterprises, which are coping with rising business costs and a fight to retain local talent.

Interior design firm IDV Concepts, which makes furniture and fittings, expects to reap an estimated $45,000 in subsidies in total over the three years.

It has 35 staff, 70 per cent of whom are Singaporeans.

Managing director Vincent Chew praised the hassle-free nature of the scheme as there is no need to apply for it.

"It definitely eases our need to go online and do the application, and improves our use of manpower," he added.





Finance Ministry clarifies wage calculations for WCS
By Melissa Pang, The Straits Times, 1 Mar 2013

THE Finance Ministry has clarified the way gross monthly wages will be calculated for Wage Credit Scheme (WCS) payouts.

The WCS, part of Monday's Budget announcement, aims to help businesses by co-funding the wage increases of employees as they restructure in a tight labour market. It also gives employers incentives to share productivity gains with their employees.

The gross monthly wage of an employee is defined as the total wages paid by the employer to the employee in the calendar year, divided by the number of months in which Central Provident Fund (CPF) contributions were made.

Total wages includes all allowances and payments for which contributions to CPF are required, including basic salary and additional wages such as overtime pay, commissions and bonuses.

This means that both fixed and variable components of wages qualify. The WCS, therefore, does not require employers to switch from variable to fixed components of wages to qualify, since these components are considered under the scheme. This is in line with the flexible wage system.

There is no need for employers to apply for the scheme, and wage credits will be paid to them automatically yearly.

The WCS will cost the Government $3.6billion over three years. It is part of a three-year transition support package.

Last night, the Ministry of Finance said it was engaging relevant industry stakeholders on further operational details "as there may be employment scenarios that are peculiar to some companies". Details will be out by the end of this month.






Getting firms to rely less on foreign labour
Levy hikes for all sectors, quota cuts for marine and services
By Melissa Tan, The Straits Times, 26 Feb 2013

FOREIGN workforce growth is going to be checked across the board and in particular, in the construction, process and marine sectors as well as the services sector.

 The services and marine sectors will see tighter foreign worker curbs in addition to the higher foreign worker levies that will be introduced for all sectors, Deputy Prime Minister Tharman Shanmugaratnam announced yesterday.


Mr Tharman said that "the basic reality is that these sectors which are most dependent on foreign workers are also the ones... which account for the lag in productivity in our overall economy.

"The tightening of foreign worker policies is therefore aimed mainly at reducing reliance on manpower, not merely replacing foreign workers with locals."

He said that the services sector, which includes food and beverage and retail, has seen low wages and low wage growth for local workers who are waiters.

"Singapore cannot carry on in the same way," Mr Tharman noted. "If we pause now and postpone the restructuring of these industries, we will face the same problems of low productivity, low wages and low profitability in future."

The foreign workforce grew by 67,000 last year and foreign labour now makes up 33.6 per cent of the total workforce, excluding foreign domestic workers.

He said the levy increases would be sharper for sectors where the foreign workforce has grown significantly while productivity has not. He said that while there will be significant levy hikes for less-skilled workers, the Government would not raise levies for skilled workers in most sectors once previously announced rates for July this year kick in.

But foreign worker quotas will be cut further for the marine and services industries.

The marine sector is more badly affected, with quotas slashed by nearly a third in two stages over five years.

Firms in that sector can now hire five foreigners for every local, a 1:5 ratio. But that ratio will drop to 1:4.5 by January 2016 and to 1:3.5 by January 2018.

The services sector will also feel the pinch.

Its overall Dependency Ratio Ceiling (DRC) - the maximum ratio of foreign staff in a firm's total workforce - will drop from 45 per cent to 40 per cent.

The S Pass component of the DRC will be cut from 20 per cent to 15 per cent. The change applies to new applicants from July 1 this year. For existing permit holders and renewals, the new DRCs take effect on July 1, 2015.

Mr Tharman said there had been "continued rapid growth" in the services industry's foreign workforce, mainly S Pass employees.

The quota reduction would particularly affect services such as food and beverage, but to help firms cope, the Manpower Ministry will allow more flexible deployment of foreign workers within a firm to raise productivity, Mr Tharman added.

The Government will also take measures to moderate the foreign workforce growth in other sectors.

Firms in the construction industry will have to use more manpower-efficient designs and technologies in building projects, said Mr Tharman, adding that the Government would adopt higher labour-saving standards for public sector projects.

The construction and process industries accounted for about half the total increase in the foreign workforce last year.

Levies for construction industry Work Permit holders will be raised by $150 between July this year and July 2015.

Steeper levy hikes of $300 will be imposed on workers hired outside a firm's Man-Year Entitlement (MYE) but there will be no further cuts to the construction industry's MYE this year, he said.

"We cannot cut off the flow of foreign workers abruptly, but we have to slow its growth," Mr Tharman said.





S Pass quotas to be cut, criteria tightened
By Melissa Tan, The Straits Times, 26 Feb 2013

 THE Government is clamping down on some S Pass holders, a category of mid-tier foreign workers earning less than Employment Pass holders but more than Work Permit holders.

Quotas for these workers will be cut for the services sector and S Pass criteria will be tightened, Deputy Prime Minister Tharman Shanmugaratnam said yesterday.

Eligibility requirements for Employment Pass holders will also be tightened.

Mr Tharman, who is also Finance Minister, said the services sector's S Pass Dependency Ratio Ceiling (DRC) will be cut from 20 per cent to 15 per cent.

The reduction applies to new applicants from July 1 this year. For existing permit holders and renewals, the new S Pass DRC takes effect on July 1, 2015.


He added that the Government would introduce a tiered salary system based on an S Pass applicant's age and qualifications.

Older applicants will need to qualify at higher salaries.

"This will help to level the playing field for our local workers in the same jobs and also nudge employers to bring in better-calibre workers."

As for Employment Passes, the Manpower Ministry will continue to tighten eligibility requirements, particularly for Q1 pass holders, Mr Tharman said.

Noting that the total number of Employment Pass holders fell last year, he said the Employment Pass policy "must ensure that firms in Singapore remain able to recruit the best teams, including both locals and foreigners".

"At the same time, we must maintain a level playing field for Singaporeans with respect to jobs and progression opportunities."

The minimum salary for Q1 pass holders, the lowest rung of Employment Pass holders, was increased by $200 to $3,000 on Jan 1 last year. Older applicants have to earn even more to qualify.

Mr Tharman said that this tightening has already led to more foreign employees falling to within the S Pass category which makes them subject to a DRC and levies.

For the longer term, the ministry will also put in place a framework to ensure that firms give fair consideration to Singaporeans in their hiring practices, he added.

Software translation firm Verztec chief executive Nicholas Goh said the measures would pose a challenge for his firm.

The firm employs 45 people, of whom 16 are foreign workers. Five of those are S Pass holders from countries such as Myanmar, Malaysia and Indonesia, while the rest hold Q1 Employment Passes.

"We may have to move some parts of our business overseas... we need specialised knowledge and the reduction makes it harder for us to bring on board people of such talent."

Verztec needs foreign workers for technical work since Singaporeans prefer managerial positions, Mr Goh said.





Businesses get tax rebate to cope with rising costs
COE extension also tweaked for commercial vehicle owners
By Magdalen Ng, The Straits Times, 26 Feb 2013


THE cries from businesses for help to deal with their rising costs were answered yesterday.

Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam recognised that in addition to rising manpower costs, businesses face other pressures such as higher rentals.

To help companies cope during the period of transition, he announced a special corporate income tax rebate for the years of assessment 2013 to 2015.

The 30 per cent rebate is capped at $30,000 per year of assessment, and is expected to cost the Government $1.3 billion over the three years.


Mr Tharman said that this will ease the owners' cash flow and also provide flexibility.

Currently, when commercial vehicles reach the end of their 10-year COE lifespan, owners can either extend the COE for five years with no further extension, or extend the COE for 10 years right away.

There will also be a one-year 30 per cent road tax rebate for goods vehicles, buses and taxis. This takes effect on July 1, and Mr Tharman expects this to save businesses $46 million.

COE premiums for commercial vehicles have been hovering above the $50,000 mark for some time, and rose to a record $63,055 in December last year.

Mr Chan Chong Beng, president of the Association of Small and Medium Enterprises, noted that many of his members are micro-businesses and buying a vehicle can be a big item in their expenses.

"Some of them must have the transport capabilities to operate, so any deduction will be better than nothing, especially when it comes to the cash flow of their business," he said.

For Mr Alan Tan, managing director of 15-year-old Rasel Catering Singapore, the tweaking of the COE extension scheme is most welcome.

More than half of his company's 10 lorries are more than five years old.

"I think that this is good news," he said. "Being able to extend the COE for another five years will greatly help our depreciation costs.

"I think this policy will help to ease the burden of rising commercial vehicle COEs."

Other businesses, however, do not think the special corporate income tax rebate will be of much help amid fast-rising business costs.

Mr Andy Tan, marketing director of homegrown food manufacturer Sing Kee Kaya, has seen rental costs increase by about 25 per cent a year for the past three years running.

The company occupies three units at Shimei East Kitchen, and pays more than $7,000 in rent each month.

He said that assuming the company's profits are $100,000 a year, it will be taxed about $8,500. The rebate will save it about $2,500.

"If my rental costs increase by $2,000 a month, that will cost me $24,000 a year. What is $2,500?" he asked.





Existing schemes enhanced to spur productivity
By Jonathan Kwok, , The Straits Times, 26 Feb 2013

 SOME existing policies aimed at raising productivity amid an economic restructuring have been enhanced.

 One measure involves the Productivity and Innovation Credit (PIC) scheme, which offers tax or cash rebates when firms spend money on productivity measures and technology.
A PIC Bonus will be added on to the existing PIC benefits that were first introduced in 2010.

The Government will give a dollar-for-dollar matching cash bonus when firms spend money to raise productivity.

For example, restaurants can include spending on dishwashing machines while contractors will get the bonus if they have an outlay on scissor lifts.

To qualify, firms will have to record a minimum productivity spending of $5,000 in one year.

The cash handouts will be capped at $15,000 over three years, from this year to 2015.

The $15,000 can be spent in any one year or spread out across the three years.

"The $5,000 minimum qualifying expenditure encourages small businesses including micro-enterprises to undertake meaningful productivity investments," said Finance Minister Tharman Shanmugaratnam.

"Based on current claims, we expect that many firms will be able to benefit from the full $15,000 bonus."

The PIC Bonus is expected to cost the Government $450 million over three years.

Industry watchers hope it will raise the still-low take-up rates for PIC benefits.

Only 30,000 of 165,000 small and medium-sized enterprises (SMEs) here have applied for existing PIC benefits, said PwC partner Abhijit Ghosh. He said the new bonus should encourage more firms to try to raise productivity.

SMEs noted that the bonus will not fully fund their technology spending, which is mostly expected to cost more than $15,000 - the cap to the payout.

The change will benefit micro-enterprises more, they add.

Mr Alan Tan, managing director of Rasel Catering Singapore, said his firm will look further into new productivity initiatives.

But he noted that some dishwashing machines - which will help the food company save manpower and water - may cost $20,000 to $30,000.

"It's nice though that the Government is helping," said Mr Tan, whose firm recorded revenue of more than $5 million last year.

"We can't be totally reliant on the Government."

The Government will make it easier and faster for businesses to make PIC claims but details of how this will work were not provided yesterday.

Another initiative outlined yesterday concerns the Partnerships for Capability Transformation scheme, which began in 2010 for manufacturing firms.

This will be expanded to other sectors, at the cost of $60 million over three years.

The scheme aims to help local firms improve and expand operations by getting them to tie up with foreign companies and learn from them.

The Government will also spend $51 million to link SMEs with research institutions and technology providers to develop ways to lift productivity.





$500m to develop future manufacturing technologies
By Grace Chua, The Straits Times, 26 Feb 2013

 EVEN as Singapore aims to help existing businesses, it is also looking for new growth opportunities in sectors such as the satellite industry and data analytics.

 That is why the Economic Development Board (EDB) will put $500 million over five years into the development of future manufacturing technologies.

Announcing this in his Budget speech yesterday, Finance Minister Tharman Shanmugaratnam said disruptive technologies such as robotics and 3-D printing are changing global manufacturing.

"We must keep up with these developments to ensure that Singapore remains a key global centre for advanced manufacturing," he added.

Associate Professor Shandre Thangavelu of the National University of Singapore's economics department said the Government was moving in the right direction.

This is because Singapore's manufacturing sector faces competition on high-value-added products from Asia and Latin America, so it needs to improve innovation in the sector by investing in competitive technologies, he added.

Small and medium-sized enterprises (SMEs) in particular need to improve their skills, said Prof Thangavelu.

"We need a national innovation system that encompasses research institutes, local companies and government agencies to pursue a key and integrated innovation strategy at the national level."

Already, Singapore is home to a handful of companies that provide 3-D printing services, said Mr Benoit Valin, director of one such firm, Research and Development Solutions.

"Traditional prototyping methods like machining and moulding work well but are relatively slow," he said. This can take weeks compared to newer methods which take just a few hours.

And demand for such services, mostly from product design, consumer and industrial electronics and other firms, is growing.

"We're fully booked for the next six months," Mr Valin said.


The Office of Space Technology and Industry under the EDB, announced last week, will administer the fund, which will go towards public research activities and help local industries expand into the satellite sector or beef up existing capabilities.

Loop Electronics, which makes specialised radio-frequency components for satellites, is one such SME.

Its managing director Lim Guan Choon said it hopes to tap the fund to build up test and production facilities and technical capabilities.

Singapore will also venture into up-and-coming services like data analytics and infrastructure development, and help SMEs expanding overseas mitigate their risks, Mr Tharman said.

For one thing, Singapore wants to develop a pool of 2,500 analytics professionals over the next five years, such as through Nanyang Technological University's business-analytics track in its mathematical sciences degree, he said.

And Singapore is working with the Asian Development Bank and private insurers to provide credit guarantees for SMEs that want to export or expand overseas.





PRE-SCHOOLS
Spending more than doubled to boost social mobility
By Leonard Lim, The Straits Times, 26 Feb 2013

 SPENDING on pre-schools will more than double to over $3 billion, as the Government seeks to lay the foundation for promoting social mobility at an earlier age.

The injection is to expand the number of pre-schools and improve the quality of education they provide, Deputy Prime Minister Tharman Shanmugaratnam said yesterday.

Parents can look forward to pre-schools sited closer to homes and workplaces, and good teachers whom are "the key to a quality pre-school sector".

Salary grants to anchor operators will be raised so that all their teachers will be graduates or diploma holders, up from 80 per cent now. Anchor operators are tasked with providing good-quality, affordable services targeted at the broad majority of low- and middle-income families, in return for recurrent government grants to help lower operating costs.

More are set to join the current two - the PAP Community Foundation and National Trades Union Congress' My First Skool - as announced last year.

This will result in 16,000 more pre-school places by 2017. The increase in anchor operators will also ensure quality and affordable pre-schools, said Mr Tharman.

All pre-school providers will also receive "greater support in curriculum and teaching guides", said Mr Tharman, who is also Finance Minister.

Teachers can get scholarships and training grants to upgrade, and will receive more structured training and career development.

The Ministry of Education (MOE) will also set up a few kindergartens to be part of the effort to improve quality.

Finally, a new autonomous agency called the Early Childhood Development Agency will be set up, to drive improvements across the pre-school sector. It will combine pre-school teams in MOE and the Ministry of Social and Family Development (MSF), and be overseen by both ministries.

In recent years, the Government has made similar moves to help children from the lower rungs of society. Last month, it said it would channel $105 million to make child and infant care services more affordable for lower- and middle-income families.

Mr Tharman stressed that social mobility is still an important feature of the education system.

But - as is the trend elsewhere - it becomes increasingly difficult to sustain beyond the first few generations who have benefited from a good education system.

To make a difference, the Government is taking steps to start earlier in a child's life. "We must find new and innovative ways to support children with disadvantages as they grow up in our primary schools and beyond," he said.

Studies show early intervention, at pre-school level, produces more positive and lasting effects on children from disadvantaged families.

At the school level, the Budget provides help for the low- and middle-income through such initiatives as an extension of the learning support programme for weaker pupils. Educationists like Dr Christine Chen welcomed the moves. Dr Chen, founder and president of the Association for Early Childhood Educators, hailed the setting up of the early childhood agency under MOE and MSF, which is in charge of social policies. Calling it critical, she said: "For very young kids, care and education is all rolled into one."

NTUC First Campus chief executive Chan Tee Seng said of the increase in grants and scholarships for teachers: "The sector can only grow with a larger pool of qualified manpower who are passionate about working with young children."





Govt-run pre-schools to boost quality
Parents laud move but fear high fees and overemphasis on the academic
By Kezia Toh, The Straits Times, 26 Feb 2013

THE Education Ministry will set up a few government-run kindergartens to catalyse change for the better in the pre-school sector, the Government said yesterday.

Last year, it set out what these public pre-schools are meant to do - namely, apply research findings in effective teaching and learning to develop teaching resources and "best practices".

These would then be shared with other industry operators to spur quality improvements, according to a joint release last year by the Ministry of Education (MOE) and the then Ministry of Community Development, Youth and Sports.

MOE would decide on the location and number of pilot centres to be set up, and when these centres will be ready to take in pupils.

These moves by the authorities came after studies - such as one commissioned by the Lien Foundation ranking Singapore 29th out of 45 countries in early childhood education standards - turned the spotlight on the industry.

They hark back to a discontinued pre-primary programme which the Government started in 1979 to help children from dialect-speaking homes learn English and Mandarin.

About 2,500 children across 31 schools in Kindergarten 2 spent a year on the programme, which was scrapped in 1990.

Yesterday, Deputy Prime Minister Tharman Shanmugaratnam said more details on the new public kindergartens will be provided during the upcoming Budget debates.

The Government is more than doubling its spending on the pre-school sector to over $3 billion over the next five years, to provide more places, and ensure quality and affordability.

It will also set up an early childhood development agency.

Parents who spoke to The Straits Times applauded the move as a commitment to raising standards in the sector, but worried about high fees and an overemphasis on the academic.

Government-run kindergartens could make formal schooling easier as it might be more geared to what a child needs to learn in Primary 1, said assistant engineer Alexia Loh, 33.

Her two children aged two and five could learn the ropes faster, she said.

"They will eventually go into a formal school system, so letting them learn earlier gives them a head start," she added.

But high fees are a worry: As the kindergarten is likely to be a half-day programme, there is still a need for working couples to fork out money for childcare, said Ms Loh, whose husband is also an assistant engineer.

Given the emphasis on learning through play touted by many pre-schools and education experts, the government-run kindergarten is unlikely to be too academic, said logistics supervisor Kenny Neo, 35, who has two daughters aged one and four.





Extending learning support to upper primary pupils
By Kezia Toh, The Straits Times, 26 Feb 2013

THANKS to early coaching in English, 10-year-old Dylan Kang from Greenridge Primary is now a more confident speaker.

But the youngest son of a technician and housewife still grapples with long sentences - affecting his ability to understand mathematics problem sums.

He is one of those who would stand to benefit from an extended Learning Support Programme, announced by Deputy Prime Minister Tharman Shanmugaratnam yesterday.

The Learning Support Programme - an early intervention programme that helps pupils who enter Primary 1 with weak literacy and numeracy skills to catch up with their peers - currently caters to Primary 1 and 2 pupils.

Dylan's mother, Madam Yvonne Lim, 39, told The Straits Times: "If there is more help - even till Primary 6 - it is always a good thing because it would improve his confidence as he moves up in primary school."

The measure is part of moves to further oil the wheels of social mobility by supporting opportunities for pupils from low- and middle-income families.

"Our experience has shown that early intervention helps but also that continuous intervention is necessary to reinforce what has been achieved," Mr Tharman said.

Conducting the Learning Support Programme is resource-intensive as classes are conducted in small groups of fewer than 10 pupils. Some 600 more "specially trained" teachers will be needed to extend the programme "beyond the early primary school years", he added.

Every year, about 10 per cent of the Primary 1 cohort in Singapore attend an English Learning Support Programme and 5 per cent attend a maths one.

Other moves to help disadvantaged students in this year's Budget include a $300 million top-up to the Edusave Endowment Fund, which provides funds, bursaries and awards to schools and students.

Another $72 million will also be pumped into the Opportunity Fund, which grants schools money that they can use to give students opportunities to learn beyond the classroom, such as funding overseas study trips.

Schools with more students from less-advantaged backgrounds will receive up to 40 per cent more: Secondary schools will get up to $275,000, while primary schools will get up to $150,000. The fund will also be extended to polytechnics for the first time.

Mr Tharman said: "They will help students with a disadvantage to catch up and better build a foundation to do well later in life."





S'poreans set to pay less in cash for medical treatment
Govt reviewing health-care system with eye on picking up larger tab
By Salma Khalik, The Straits Times, 26 Feb 2013

 SINGAPOREANS can expect to pay less in cash for medical care and treatment, following the Government's review of health-care financing.

 The Government will pick up a larger tab in future, as will health insurance and Medisave.

Announcing this yesterday, Deputy Prime Minister Tharman Shanmugaratnam said: "As our society gets older, we will see higher demand for quality care, longer life expectancy and the rising incidence of chronic diseases."

Families are also getting smaller and there will be singles with no family support when they get old.

With these population changes in mind, the Government has embarked on a thorough review of all components of the health-care system.

"Our approach to health-care financing has to evolve," said Mr Tharman.

"This should seek to provide greater peace of mind for all Singaporeans while ensuring that the health-care system remains sustainable."

Older Singaporeans have often expressed anxiety over rising health-care costs and their fears that they will not be able to foot the bills when they fall ill.


In last year's Budget, Mr Tharman announced that the Government expects to spend more on health care - growing from $4 billion to $8 billion in four years' time.

While most of the help will be targeted at the poor, he said the Government also wants to ensure that the needs of the middle-income group are met.

It has already "significantly" increased subsidies for middle-income Singaporeans needing long-term care.

Medifund, the safety net for the poor, has also been expanded to extend help to middle-income families.

Part of the current review will broaden insurance coverage "so that as a society, we support those who require more help", he said.

This will be done by expanding risk pooling, but he added that the Government has to be careful how this affects the premiums people will need to pay.

Medisave is also set to play a larger role in helping people meet their health-care costs, without depleting their savings.

And for those who still need more help, he promised to expand the use of Medifund.

The Government will be adding $1 billion to the Medifund capital sum, bringing the total to more than $4 billion, in the biggest single injection of funds since it was started in 1993.

This comes in the wake of the first deficit encountered by Medifund in financial year 2011.

Another $250 million will be used to bump up the Eldercare Fund, which is used to help patients in nursing homes run by voluntary welfare organisations. With the top-up, the capital sum goes up to $3 billion.

For both the Medifund and Eldercare Fund, only the earnings from the capital sum are used to help poor patients.

The current review , Mr Tharman said, is a major one and Singapore will be studying the strengths and weaknesses of other countries' health-care systems.

It will also consult broadly with Singaporeans and consider all options carefully.

He said: "We want to do better for today's generation of Singaporeans, and do it in a way that is fair and sustainable for the next generation."




Fund for seniors to cover more aids
By Salma Khalik, The Straits Times, 26 Feb 2013

 MADAM Helen Wong, 75, is looking forward to enjoying her Chinese television shows without disturbing her neighbours.

When she gets new hearing aids, she will pay $300 instead of the full $3,000 - with help from the Senior's Mobility and Enabling Fund to be launched in the third quarter of this year.

 The Government will top up the $10 million in the original mobility fund - which helps offset the cost of basic aids such as walking frames and wheelchairs - with another $40 million, to be used over the next five years.

It is also expanding what the fund can be used for, to include a wide range of aids that will enable the frail elderly to continue living at home, and with a better quality of life.

Those eligible are people aged 60 and older, and from households with a per capita income of $1,500 or less.

They can apply through the Agency for Integrated Care for help from the fund to cover 90 per cent of the cost of items such as motorised wheelchairs, shower chairs, hospital beds and pressure relief mattresses, as well as hearing aids and spectacles.

Patients receiving home care services, such as home nursing care, can get help to pay for half the price of things such as catheters, adult diapers and nasal tubes, capped at $1,200 per year. Those from families with a per capita income of $600 or less are eligible for an 80 per cent subsidy capped at $2,000 a year.

The fund can also be tapped to help offset transport costs for the elderly going for dialysis, rehabilitation or dementia care.

The changes also make it easier for the poor to apply for help. Those living in three-room or smaller flats will be eligible automatically for a 90 per cent subsidy on devices that cost $350 or less.

They will have to be means-tested for costlier items.

Said Health Minister Gan Kim Yong: "This enhancement is a significant move.

"In essence, we are expanding the fund from one that helps seniors move around to one that helps them to live independently in the community in a holistic manner."

He said the changes are a "direct response to feedback from the ground" on how such help can be made more meaningful.

The original mobility fund, set up in April 2011 with $10 million, has disbursed only $516,000 to help about 1,400 people over the past two years. It was restricted to basic items such as walking frames, and transport subsidies to get to a day rehabilitation centre.

Without the changes to the fund, Madam Wong would have continued missing most of what is said around her.

She is unmarried and supported by her nephews. Five years ago, when her hearing became bad, they shared the cost of a hearing aid, which made a vast improvement to her life. But after it got spoilt, she did not want them to spend so much money on a replacement.

She has been struggling to get by, looking directly at those talking to her and asking them to speak slowly and loudly.

All that will change when she gets her new hearing aids. And she will be able to turn down the volume of her TV set too.





Help at hand at social service offices
20 one-stop centres for the needy will be set up closer to their homes
By Janice Tai, The Straits Times, 26 Feb 2013

TWENTY social service offices will spring up in Housing Board towns over the next few years to provide integrated, citizen-centred social services.

 With these offices, the needy will be able to get help from a one-stop centre located closer to their homes.

Currently, some residents complain of having to go to multiple agencies and repeat their stories as the help they need tends to involve various parties.

Others do not know where to turn to for help and fall through the cracks.

Madam Tina Many, a widow who has had difficulties paying her rental and utility bills because she could not find work, said she hopes such an office will be located near her one-room rental flat in Bukit Batok.

The 57-year-old found herself having to make more than 10 trips to the community development council (CDC), self-help group Sinda and her MP over the last three months to get financial aid and food vouchers.

"It is really troublesome as some of the agencies are far away and can take 40 minutes of travel by bus. Hopefully, the office will be nearby so I can save time and transport costs," said Madam Many.

Needy families like hers will be able to apply directly for help at the new social service offices, which will in turn work with the different help and government agencies, and schools in the area.

For example, some agencies, such as CDCs, may offer financial aid schemes while others like the family service centres provide programmes and services for families.

Having a dedicated office to plan and coordinate such services will ensure that the families get holistic support, whether financial or emotional.

Deputy Prime Minister Tharman Shanmugaratnam said in his Budget speech yesterday: "We want citizen-centred social services that are more integrated, so that anyone who needs help can get it conveniently and need not go to different agencies."

Other initiatives that were announced yesterday to improve the delivery of social services include a new agency dedicated to the disabled, and integrating eldercare services under one roof.

In the past, both the Centre for Enabled Living and the Agency for Integrated Care (AIC) handled services for the aged. In future, all eldercare services will come under the new AIC which will help the elderly and their caregivers access medical and social care services in the community.

The new agency dedicated to the disabled will serve as a focal point for all their needs, which may range from education and transport to housing and caregiving.

More details will be released by the Ministry of Social and Family Development and the Ministry of Health in the upcoming Committee of Supply debate.


FOR THE NEEDY


Injection to ComCare Fund, offering temporary short- to medium-term aid such as cash handouts and kindergarten subsidies


FOR WORKERS


Top-up to Lifelong Learning Endowment Fund which finances training programmes






Public assistance amount raised
By Melody Zaccheus, The Straits Times, 26 Feb 2013

 AN ADDITIONAL $50 will go a long way for retiree Sarjit Kaur and her eight-year-old granddaughter.

 "The money can help pay for toiletries and groceries. It may also mean the occasional treat for my granddaughter," said the 62-year-old former security guard.

 The $400 a month she now gets as a single-person household under the Public Assistance (PA) Scheme will be raised to $450.

Madam Kaur, who is raising the young girl, lives in a two- room rental flat in Henderson Road.

The PA Scheme provides a basic level of financial aid to those who are permanently unable to work. It will be raised to help recipients meet their daily needs, Deputy Prime Minister Tharman Shanmugaratnam said yesterday.

With the change, a couple will receive an additional $90 a month, raising their monthly public assistance amount to $790. In addition, those receiving public assistance will continue to receive free services such as medical treatment at polyclinics and restructured hospitals, primary and secondary school education, and a range of social services.

The Government will also be more flexible when these recipients need to incur other expenses.

To help pensioners, the Government will raise the Singapore Allowance and monthly pension ceiling by $20 per month to $280 and $1,210 respectively. This will benefit about 10,000 pensioners.

Also, a further $200 million will be injected into the ComCare Fund for needy Singaporeans.

The fund offers temporary short- to medium-term aid, such as cash handouts and kindergarten subsidies.




1.3 million taxpayers will gain from income tax rebate
Proportionally, those from lower tax brackets will benefit more: Analysts
By Magdalen Ng, The Straits Times, 26 Feb 2013

 MANY middle-income earners will not reap a huge bonus from the 30 per cent tax rebate announced yesterday but it will still be welcome.

 For a young parent such as Mr Balaji Narasimhan, whose annual household income is about $50,000, the rebate amounts to about $400 a year.

Mr Narasimhan, 32, a private tutor, said: "When you look at it, it's barely $40 a month, a drop in the bucket of a family's household expense. It doesn't make much of a difference actually. But it's still a good thing."

The personal income tax rebate will apply for the year of assessment 2013, meaning income earned in the 2012 calendar year.

Those 60 and above will receive a rebate of 50 per cent while people under 60 will get a rebate of 30 per cent. Both rebates are capped at $1,500.

To enjoy maximum tax rebates, an individual aged less than 60 will need to have taxable income of approximately $7,900 per month, or $94,400 per annum. It works out to $6,250 monthly, or $75,000 a year for those aged 60 and above, based on current tax rates, according to PricewaterhouseCoopers (PwC) Singapore.

Deputy Prime Minister Tharman Shanmugaratnam said that 1.3 million resident taxpayers will benefit, at the cost of $615 million to the Government.

This is part of the Government's direct assistance to households to help them cope with the increase in cost of living. Other measures include the one-off goods and services tax vouchers and Medisave account top ups.

Mr Tharman added that there is a need to redistribute to benefit the lower- and middle-income groups, by maintaining a progressive system of taxes and benefits, and preserve a sense of fairness, even as measures are taken to ensure that the economy remains competitive.



Mr Narasimhan would rather the Government abolish the GST for essentials, especially since Singapore already has a very liberal tax regime and rebates do very little to add dollars to an average person's pocket.

 Mr James Clemence, partner at PwC for International Assignment Services (Singapore), said: "The tax rebate was a surprise and some might argue it wasn't necessary, given the comparatively low tax rates here already.

"But nonetheless, it will be seen as a welcome offset against the increasing burden of inflation and soften the blow for those with increased Central Provident Fund contributions and additional tax on housing.

"While the impact may be relatively small, it is some recognition for all the hardworking taxpayers in Singapore."

Experts noted that workers at the lower end of the income tax brackets and older workers will benefit most.

Ms Wu Soo Mee, partner for human capital at Ernst & Young, said the higher tax rebate for those aged 60 and over recognises that older taxpayers tend to earn less.

Mr B. J. Ooi, head of international executive services at KPMG, said: "I actually did not expect very much in the form of personal tax rebates, so for those who earn lower wages, the impact will be greatly felt, because proportionally, they benefit more."





$200m to spur private funding for arts, culture
By Rachel Chang, The Straits Times, 26 Feb 2013

A $200 MILLION government fund to encourage private donations to the arts and culture in Singapore will be set up, said Deputy Prime Minister Tharman Shanmugaratnam yesterday.

The fund will match dollar-for-dollar the amounts given by private donors, he said, adding that the move was in recognition of the growing role that the arts and sports play in enriching life in Singapore.

Details of the new fund will be announced next month during the debate on the budget of the Ministry for Culture, Community and Youth, said its spokesman yesterday.

The news was cheered by people in the arts and cultural sector.

Nominated MP Janice Koh, who represents the arts, said it was "great news" as the uncertain economic environment has affected arts sponsorship.

"A matching fund would encourage a lot more businesses and individuals to come forward to support the arts, and also incentivise arts groups to work harder to find additional sources of funding besides government grants," she said.

Intercultural Theatre Institute director T. Sasitharan said the fund will help develop private philanthropy in the sector, especially donations from individuals.

This, he said, is "absolutely critical to diversify the ecology of arts and culture in Singapore".

A thriving private funding landscape would also ultimately relieve the pressure on government coffers to support the arts, he added.

"This is very timely, especially with the growing interest in arts education in Singapore."





PROPERTY
Higher taxes on high-end and investment homes
By Esther Teo, The Straits Times, 26 Feb 2013

THE well-off who own luxury residences and investment homes will pay higher property taxes.

These will be introduced in phases over two years, starting Jan 1 next year.

Most owner-occupied homes, however, will enjoy a lower tax rate, said Deputy Prime Minister Tharman Shanmugaratnam yesterday when he presented the 2013 Budget.

"This is fair. The property tax is a wealth tax and is applied (to homes) irrespective of whether lived in, vacant or rented out. Those who live in the most expensive homes should pay more property tax than others," he said.

So, owner-occupiers of landed homes in central areas with an annual value of $150,000, for instance, will stump out 69 per cent more in property tax or an additional $5,120 a year. The annual value is the estimated annual rent the property may fetch.

But mindful that some retirees may be cash poor while living in homes of significant value, Mr Tharman said the new tax structure will ensure that most retirees pay less in property tax.

The new tax structure, which he tagged a "more progressive property tax", will swell government coffers by an additional $53 million when it takes effect fully on Jan 1, 2015.

But it will allow the Government to achieve greater social equity without hurting Singapore's economic competitiveness or reducing the incentives for enterprise, the minister added.

Besides new tax rates, the tax bands will also undergo changes.

The zero property tax band will be widened to the first $8,000 of a home's annual value, from $6,000. This will allow 950,000 owner-occupied homes to enjoy some tax savings, he said.

Homes with annual values of $12,000, like a five-room Housing Board flat, will save $80, which works out to 33 per cent of their current bill.

These savings will reduce property tax revenue by $44 million.

Besides the existing zero, 4 and 6 per cent tax rates, five higher rates will be introduced: ranging from 8 per cent to 16 per cent.

This means the top 1 per cent of owner-occupied homes - or 12,000 units - will pay more taxes, contributing an extra $25 million in revenue. But the increases will be small except for those at the very top.

For investment homes, which are not owner-occupied, new marginal property tax rates of 12 per cent to 20 per cent will be levied instead of the current flat 10 per cent rate across the board.

So while homes with annual values of $30,000 and below will continue paying a 10 per cent tax, investment homes with an annual value of more than $30,000 will pay higher taxes of between 12 per cent to 20 per cent.

These properties belong to the top one-third of all non-owner- occupied homes, or the top half of private homes, said Mr Tharman.

However, most investment suburban condominiums will see a small increase in property tax of about $100 to $300 per year with increases only "significant" for high-end properties.

These changes for investment homes will net the Government $72 million more in revenue.

Property tax rates for nonresidential properties will remain unchanged at flat 10 per cent. Tax refunds on vacant properties will be removed to provide consistency and equity in tax treatment, said Mr Tharman.

Real estate investor Sameer Aswani, 37, who owns investment homes in such upmarket condominiums as The Sail and Marina Bay Residences, said that from a businessman's point of view, the higher taxes are obviously not preferred. "But from a government's point of view, in the light of inflation, they have to take care of the 80 per cent who own HDB flats.

"If you have the money to buy high-end homes then maybe it's fair that you pay more taxes."





More expensive cars to attract higher tax
By Royston Sim, The Straits Times, 26 Feb 2013

 VEHICLE taxes will be tiered so that the more expensive the make of the car, the higher the tax rate.

The new tiered Additional Registration Fee (ARF) structure is in line with the Government's move to make the tax system as a whole more progressive.

Currently, ARF - or the main vehicle tax - is a flat rate of 100 per cent of a car's Open Market Value (OMV).

With the tiered structure, a car with an OMV of up to $20,000 will be taxed at the current rate of 100 per cent. For those with higher OMVs, the next $30,000 will be taxed at 140 per cent, and the remaining OMV above $50,000 will be taxed at 180 per cent.

The change will bring in about $150 million in additional revenue every year.

Car dealers said yesterday that it will hurt especially the sales of European marques and see the return of mass-market brands.

To illustrate, Deputy Prime Minister Tharman Shanmugaratnam compared the impact of the new ARF on a Mazda 3, Audi A5 and BMW 735.

The Mazda 3 with an OMV of $18,000 will see no change.

The mid-range Audi A5 with an OMV of $45,000 will attract an extra 22 per cent of ARF or $10,000 more. A luxury model like the BMW 735 will see a 42 per cent rise in its ARF from $74,000 to $105,200 - an additional $31,200.

The rates will take effect from next month's certificate of entitlement (COE) bidding exercise.

The Land Transport Authority will defer the first bidding exercise next month by a week to March 11 to 13, "to give consumers and the motor industry more time to adapt to the changes".

The second bidding exercise next month will run from March25 to March 27, while the exercises in April will start on April 8 and April 22. The bidding schedule from May to December this year will not be affected.

Dealers like managing director Victor Kwan of Wearnes Automotive said the new ARF, coupled with a separate announcement yesterday that capped motor vehicle loans at 50 per cent or 60 per cent of its price, is a powerful force that will push down COE prices. "The higher cost and lower loans will affect a lot of people."

Mr Ron Lim, general manager of Nissan agent Tan Chong Motor, said: "It actually levels the playing field, especially for mass market brands. That's something good for our segment."

Volkswagen Singapore general manager of sales Daniel Chong said the combination of the tiered ARF scheme and Carbon Emissions-based Vehicle Scheme rebates could mean a "substantial cost advantage" for buyers of affordable, low-emission cars.

Porsche sales manager Jason Lim said luxury brands with an OMV slightly above $50,000 will be hurt and named Audi, Mercedes and BMW as among them. "We might see Japanese brands making a comeback."





A Budget with something for everyone
By Robin Chan, Leonard Lim And Tessa Wong, The Straits Times, 26 Feb 2013

 A BROAD-BASED Budget for the masses is what experts and ordinary Singaporeans are calling the slew of measures announced by Deputy Prime Minister Tharman Shanmugaratnam yesterday.

 While the Government continues to press on with economic restructuring, there is also help for the low-income, middle-income and elderly.

Mr Poh Bee Tin, a tax partner at Ernst and Young Solutions, said: "A quick roll-call of the winners: SMEs, and lower- and middle-income Singaporeans."

In his Budget speech, Mr Tharman, who is also the Finance Minister, announced more measures to restructure the economy into one with higher productivity.

Higher foreign worker levies and lower dependency ratios are in the works, but he also provided help to companies hit by higher costs with a new $3.6 billion Wage Credit Scheme. It is intended to encourage companies to share productivity gains with their employees through raising their wages.

Bank of America Merrill Lynch economist Chua Hak Bin said: "There will still be pain in the end, but as probably expected, there is no stopping in the direction of restructuring."

For the man in the street, there is help to cope with higher living costs, including an extra one-off Goods and Services Tax voucher, one to three months of service and conservancy charges rebates as well as a personal income tax rebate.

"This is a Budget to help Singaporeans cope with cost inflation and reduce the increasing income gap among Singaporeans," said Ms Anna Low, a partner at accounting firm KPMG.

Still, some feel the Government needs to go further.

Ang Mo Kio GRC MP Inderjit Singh said the $200 increase in the Workfare Income Supplement eligibility ceiling to $1,900 in monthly income "won't impact families much". "Overall, the intentions are good but the implementation didn't go far enough," he said.

Singaporeans also welcome the review of the health-care system, as well as increased spending to level pre-school education opportunities and improve social mobility. Mr Kong Ho Loon, 38, a bank executive who has two children aged three and six, said: "They have heard the feedback from the population...Such pre-school measures are good."

Dr Chua said the moves in pre-school education would help "to ensure social mobility is not handicapped by what seems to be an emerging income divide".

Women's advocacy group Aware said in a statement to the media: "Having good, affordable and conveniently located pre- school facilities is a critical factor in getting women who have had children to return to the workforce, and in persuading others to have children. Expanding after- school availability is also commendable."

Comparing it with past Bud-gets, Holland-Bukit Timah GRC MP Liang Eng Hwa said it shows the stance towards social support has changed.

"It's quite clear we are prepared to spend more on that now, income redistribution as well," he said.

Nominated MP Nicholas Fang said these are continued responses to a Singapore that is changing both economically and socially.

He said he expects to see more adjustment to policies in the next few years.

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