The unexpected 4.1% increase is significantly higher than initial forecasts of just 1.1%.
As Singapore's economy grew stronger in time for the 2018 budget, UOB estimates the government probably received more revenue during the financial year than they had initially estimated.
According to a macro note, the government may end 2017 with additional revenue of $2b. This implies a 4.1% increase in revenue from 2016, significantly higher than their initial estimates of 1.1%.
For Budget 2017, the government estimated 2017 operating revenue at $69.45b, an increase of 1.1% over 2016’s $68.67b.
UOB forecasts revenue from corporate income taxes, the largest revenue contributor, to hit $14.8b in 2017, 8.2% higher than government’s initial estimates of $13.6b.
Additionally, the higher volume of property transactions may have also bumped up government revenue from stamp duties which may amount to $5.0b, 83% higher from government estimates of $2.7b.
UOB economist Francis Tan commented, "We reckon that government’s conservative estimate during Budget 2017 was understandable as property transactions then were low and overall property prices were still on a declining trend."
Although there were upside surprises in government revenue, it is also worth noting that revenue from GST and personal income taxes may have fallen slightly below government’s initial estimates.
GST revenue in 2017 played around $11.2b, 0.9% lower than government estimates of $11.3b. Meanwhile, personal income taxes are foreseen to reach $10.70b, 0.3% lower than government estimates of $10.74b
Moreover, the government had hinted about the need to derive more revenue during Budget 2017.
Do you know more about this story? Contact us anonymously through this link.