, Singapore

Singapore Budget 2022: GST hike delayed, carbon tax raised

Singapore's national budget will be delivered by Finance Minister Lawrence Wong today. 

11:30 am Singapore Business Review is tracking developments from Singapore’s 2022 budget statement live as they are announced by Finance Minister Lawrence Wong. The formal presentation kicks off from 3:30 pm today. Follow us live!

3:36 pm


  • Singapore has one of the highest rates of vaccinations in the world. Read HERE.
  • The economy has rebounded since the worst recession since its independence.
  • Singapore will continue to benefit from the pick-up in the global economy, widespread booster, and vaccination efforts from the global economy. 
  • The global economy is still vulnerable to pandemic-related risk and supply chain disruptions. 
  • A slowdown in external demand is expected. 
  • The economy is expected to grow by 3% to 5% this year. Read HERE.


  • Small business recovery grant, $1000 per local economy up to a cap of $10,000 per firm. 
    • Hawkers and coffee shop owners who do not hire local employees can also receive $1,000 payout.
  • COVID-19 recovery grant for workers who have experienced income loss extended to the end of this year.
  • Jobs Growth Incentive extended to September this year with step-down support rates reflecting improved labour market conditions for those who have difficulty finding jobs
  • There is targeted assistance for the aviation sector.
    • We must preserve and enhance our status as a global aviation hub.


  • MAS takes the pre-emptive step of raising the rate of appreciation to help dampen inflationary pressures.
  • Significant additional support for businesses and households:
    • Temporary bridging law programme and enhanced trade loan scheme with revised parameters extended to 30 September
    • Access for project loans for the construction sector extended to 31 March 2023
    • For households, GST voucher rebates doubled this year
    • Distribution of $100 CDC vouchers to all Singaporean households


  • Singapore continues to be a strategic launchpad for businesses around the world looking to expand to markets in the region. 
  • Wong cites BioNTech as an example. Read HERE.
  • Singapore has to remain open to talent from around the world.
  • 11 Singapore-based startups achieved unicorn status in 2021.
    • This creates highly paid jobs for Singaporeans.


  • The rivalry between the US and China has intensified and will impact the world for the rest of the decade and more. 
  • The pandemic turbocharged the move to digitalisation. This will disrupt and reshape businesses, impact a wide range of jobs. 
    • It’s possible for multinational companies to reshore to their country. 
  • Our enterprises must accelerate their transformation and look for opportunities beyond these shores. This fast pace can bring anxiety about the future.


  • Real incomes of local workers at the 20th percentile have risen by almost 40% between 2009 and 2019, faster than that of a medium worker.
  • Equality has improved in the last decade. 
  • An increasing shift in market rewards towards those with high skills, who can take advantage of new technologies, is expected. This will make it harder to keep growth inclusive.
  • Aging population: 16% of the population are aged 65 and above, by 2030 the government expects 25% of the population to be aged 65 and above. 
    • Planning ahead needed to have resources to take care of senior citizens.

4:00 pm


  • Moving to net-zero will be costly, but Singapore cannot afford to skimp on.
  • Actions are needed to progressively de-carbonise the economy.


  • Excluding COVID-19-related expenditure at $88b or about 18% of GDP, Singapore's was probably the lowest amongst the more developed economies.
  • NRIC is a continuing stream of income from reserves accumulated over the years: average revenue stream of $17b or 3.5% of GDP.
  • Taxes in Singapore are much lower than in most countries. There is no intention to adopt the European model of high taxes to provide universal welfare. 
  • Social spending almost doubled from $17b to $31b over the last decade, taking up almost half of the annual budget.
    • This increase was used for higher subsidies for healthcare systems, tertiary education, SkillsFuture scheme, and workers support scheme.
  • To strengthen risk-sharing between government and citizens, everyone’s contributions matter and Singaporeans will not be left helpless when they’re down.


  • By 2030, we expect government expenditure to increase to more than 20% of GDP. Most will go to healthcare.
  • There will not be enough to cover additional spending needs.


  • These are needed to raise additional revenue. 
  • Reserves should be used for major crises. 
  • Tax systems adjustment to raise additional revenue to contribute fairer revenue structure. Those with greater means should contribute a larger share. 
  • This budget is about charting a new way forward together, strengthening the social compact for a post-pandemic world, developing a fairer, sustainable more inclusive society.


  • Digital capability is the first priority.
    • This will allow people to access digital services. 
    • Singapore has adopted 5G internet and will invest in 6G. Read HERE.
    • Upgrade broadband infrastructure to increase broadband access speed 10x over the next few years.
    • Additional $200m for schemes that enhance digital capabilities for businesses.
  • Pervasive innovation across the economy
    • This is built on strong R&D foundations.
    • Government investment in R&D was maintained at 1% of GDP
    • $25b was set aside under the Research, Innovation and Enterprise 2025 strategy.
    • Unfortunately, R&D expenditure is still behind other countries.
    • To further support collaborations between students and SMEs, the capacity of research centres to be increased to close to 2,000 innovation centres across five sectors: agritech, construction, food manufacturing precision engineering, and retail.
    • An eight-fold increase in the number of innovations is expected.
  • Strengthen local enterprise ecosystem
    • $600m set aside to increase the range of solutions under Productivity Solutions Grant for SMEs.
    • New initiative: Singapore Global Enterprises
    • New Singapore Global Executive Programme will help nurture the next of industry leaders.
    • Two components of the Enterprise Financing Scheme enhanced
      • M&A loan programme to include domestic M&A activities from 1 April 2022 to 31 March 2026
      • Enhanced Trade Loan extended by 6 months to September this year, enhanced 70% risk-share under the Trade Loan for enterprises venturing into more nascent markets (ex. Bangladesh, Brazil)

4:30 pm


  • On SkillsFuture: Waiver of skills development levy requirement for the qualifying period of 1 January 2021 to 31 December 2021
    • Estimated to double eligible employers from 40,000 to 80,000
    • Deadline to claim credit extended to 30 June 2024
  • On Company Training Committees (CTCs): to date, 800 companies of different sizes
    • $100m set aside to support National Trades Union Congress (NTUC) to scale up CTCs, support companies who have set up CTCs
  • SG United Mid-career Pathways Programme to be made a permanent feature of training and placement ecosystem
  • New SkillsFuture Career Transition Programme


  • The foreign policy framework is to be reviewed and updated continually.
  • The Framework for Employment Pass (EP) holders will be updated: minimum qualifying salary to be raised from $4,500 to $5,000 this September, (financial services: from $5,000 to $5,500)
    • Changes will apply to renewal applications one year later
  • SPass holder minimum qualifying salary will be raised in phases.
    • First step: $2,500 to $3,000 for September this year ($3,000 for $3,500 for financial services)
    • To be raised again in September 2023 and September 2025
    • These changes will apply to renewal applications one year later.
    • Tier 1 levy will be raised from the current $330 to $650 by 2025.
  • Work permit policies in construction and process sectors to be re-adjusted 
    • The dependency ratio rating is to be reduced from 1:7 to 1:5.
  • Man Year Entitlement Framework to be replaced with new levy framework
    • These changes will take effect on 1 January 2024.


  • Singapore is disadvantaged by a lack of natural resources.
  • Singapore is on track to achieve 2030 green targets.
  • “We will therefore raise our ambition to achieve net-zero emissions by mid-century.”
  • The carbon tax will be raised from $5 per tonne to $25 per tonne in 2024 and 2025.
    • $45 per tonne in 2026 and 2027
    • $50 per tonne by 2030
    • Current rates will be unchanged until 2023.
    • An additional carbon tax will not be imposed on petrol, diesel, and compressed natural gas.
  • Transition framework to be put in place to help companies, allowances to be determined by efficiency standards and decarbonisation targets, to be implemented in 2024.
  • Also starting 2024, businesses will be allowed to use high-quality international carbon tax credits to offset up to 5% of their tax emissions in lieu of paying carbon tax. 
  • Households may feel the effects of these through higher utility bills (ex. $25 per tonne = $4 per month increase).
  • Additional revenue is not expected from the increased carbon tax, proceeds will be used to support the shift to decarbonisation.
  • We must move decisively toward the future of a net-zero world.
  • Singapore will become a go-to location in Asia for expertise in carbon services, and a trusted regional marketplace for carbon credits.


  • Singapore accounts for close to half of the ASEAN green bond market.
  • Up to $35b of green bonds will be issued by 2030 to fund public infrastructure projects.
    • An inaugural green bond will be issued this year.


  • Zero growth rate for private vehicles is maintained.
  • Internal combustion engine vehicles will be phased out by 2040.
  • More charging points will be built to increase EV adoption. Financing will come from green bonds.


  • Progressive wages to be extended to retail, food services, and waste management sectors over the next two years.
  • Companies hiring foreign workers are required to pay local employees at least the local qualifying salary.
  • The government will require eligible suppliers from March 2023 to be accredited with the progressive wage (PW) mark when the contract with the government.
  • Progressive Wage Credit scheme will provide transitional support for businesses
    • The government will be co-funding at 50% from 2022 to 2023
    • 30% from 2024 to 2025
    • 15% in 2026
  • Workfare payouts to be raised in 2023, to be extended to younger workers (aged 30-34) 
  • An average of $1.8b will be spent over the next five years for the PWCs and enhanced Workfare.


  • The government healthcare expenditure tripled from $3.7b in 2010 to $11.3 b in 2019. If the current healthcare expenditure continues to increase at a similar rate, it will be at $27b or around 3.5% of GDP by 2030. This might not be sustainable. 
  • Healthcare ecosystems should be reconstructed to centre around the patient and must be designed to keep patients healthy and provide care in the most appropriate setting.
  • There is a need to rethink the current Healthier Singapore Strategy.


  • Singapore will lose tax revenue in Pillar 1, the tax system must be adjusted in response to Pillar 2.
  • Top-up Minimum Effective Tax Rate (METR) being considered, for further study by IRAS. 
  • It is premature to determine the eventual fiscal of both pillars. 
  • BEPS 2.0 has not reduced global competition on investments, might intensify. 
  • Need more time to study these issues thoroughly, changes in the corporate tax system to be announced “when we are ready”.


  • PIT rate will be increased from 2024.
  • The portion of chargeable with an excess of $55k to $1m will be taxed at 23% whilst income beyond $1m will be taxed 24%, both up 22%.


  • Net wealth taxes are difficult to implement, studying the experiences of other countries to explore options.
  • Adjustments are to be made to property tax, the principal means of taxing wealth.
    • For non-owner-occupied residential properties: from 10-20% to 12-36%
    • For owner-occupied residential properties: from 4-16% to 6-32%
    • These will be implemented in two steps starting 2023, expected to raise tax revenue by $380m per year.
  • The luxury car tax will be increased.
  •  Additional registration fee tier for luxury cars for those above market value of $80k will be taxed by 220%.


  • The implementation of GST increase will be delayed to 2023. 
  • First increase: 1 January 2023 from 7% to 8%.
  • Second increase: 1 January 2024, 8% to 9%.
  • Town Councils will be provided with an additional $15m per year to absorb additional GST payable on service and conservancy charges.
  • The government fees and charges will not be increased until 1 January 2023.
  • The government to create a committee against profiteering to prevent companies from raising prices due to the GST hike.
  • Assurance packages, GST vouchers to be issued to offset effects of GST hike.


  • Past reserves utilised for COVID-19 relief
    • $31.9b from 2020
    • $5b from 2021
  • Advances were taken for a contingency to be replaced through the supplementary budget of 2021. 
  • $6b to be used to maintain multiple layers of public health defence, to be sourced from past reserves. 
  • Total expected draw from past reserve form 2020 to 2022 for up to $42.9b. This is less than the initial draw of $52b that the president agreed to meet new spending needs, expenditure growth needs to be managed. 
  • From FY 2023, an additional 1% cut will be applied to budgets of ministries and organs of states to fund new priorities. 
  • Overall deficit for $5b or 0.9% of GDP for FY2021.
  • For FY2022, the budget remains expansionary to support the economy, the expected overall deficit is $3b or 0.5% of GDP.

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