Before the Singapore Budget statement is announced later today by Finance Minister Lawrence Wong, here are some key points that will be brought up:
Budget 2022 is expected to return to a modest surplus position
The past two years resulted in an expected $75 billion deficit which required the government to tap into its reserves during the height of the pandemic but this year could see the Budget return to a surplus – that's when the government spends less money than it takes in – position. This means we could see our economy grow by three to five percent in 2022, after a seven percent growth last year.
The planned GST increase might be tackled in steps
Like it or not, the GST is set to increase again from seven to nine percent this year. However, there are discussions to tackle this in steps to avoid sudden cost of living fluctuations. You know what this means of course – that prices of things (from food and groceries to dining out and retail therapy) will increase in Singapore.
More measures to help people and businesses manage the costs of living
Following the increase in the cost of living in Singapore, there will be people and businesses that will face challenges amid rising inflation. But as with the past few years, there will be government support measures and aid to help lower-income families.
Let's talk about carbon pricing and green alternatives
The current carbon price charged by Singapore (up till 2023) is $5 per tonne, and at last year's Budget, this was deemed too low. 2022's announcement could see a revised carbon tax rate for 2024 onwards. Minister Lawrence Wong said that this would reflect the cost of carbon emissions and how such pricing can effectively influence investment decisions.
However, KPMG Singapore’s head of tax Ajay Kumar Sanganeria believes increasing the carbon prices is unlikely to bring about a big enough reduction in emissions and that Singapore should also look more into greener alternatives. Budget 2022 could potentially introduce new incentives for businesses to go green, in the face of a rising carbon tax bill.
Could we be seeing the introduction of a wealth tax?
The pandemic has seen wealth inequality widen and most believe that 2022 is the year of introducing a wealth tax. How this will be executed is still being speculated. Some believe it could be on luxury cars and homes – while some say it might result in higher petrol duty rates – despite already record-high petrol pump prices.
Stay tuned for more as we update you on Budget 2022.