Budget 2023 recap: What you need to know
PHOTO: The Straits Times
PUBLISHED ONFebruary 20, 2023 9:15 AMByEnya Rodrigues
In his Valentine's Day Budget 2023 speech, Deputy Prime Minister and Finance Minister Lawrence Wong discuss a multitude of issues that are concerning Singaporeans today.
He addresses a number of pressing matters, most notably the difficulties that many are facing with the persistently high levels of global inflation, as well as the sky-rocketing prices of HDB flats.
Here is a quick recap of the seven announcements that will most affect you as an individual.
1. Cost of Living, CDC and GST Vouchers
In order to cushion the impact of the current high inflation rate, the Singapore government will be handing out "Cost-of-Living" payments to eligible Singaporeans who are 21 and above this year, have an annual assessable income below $100,000 and do not own more than one property.
The Cost-of-Living payments are tiered based on an individual's assessable income in 2022, ranging from $200 to $400. The payment will be paid to about 2.5 million Singaporeans in June 2023.
All Singaporean households will also receive $300 in Community Development Council (CDC) vouchers in Jan 2024, up from the previously declared $200.
Lastly, adult Singaporeans, aged 21 and above, who have an annual assessable income of $34,000 or less will also see an increase in the amount of GST vouchers they are eligible for this year under the Assurance Package.
Those residing in homes with annual values of $13,000 and below will receive $700 in 2023, up from the previously declared $500, and a further $850 in 2024.
Those residing in homes with annual values of above $13,000 to $21,000 will receive $350 in 2023, up from the previously declared $250, and a further $450 in 2024.
Senior citizens of age 55 and above in 2023, with on or less property and up to an annual income of $22,000 will also receive an additional $200 to $300 in cash payouts.
The Assurance Package was first announced in the 2020 Budget with the goal of cushioning the rising cost of living due to persistent inflation and GST hikes.
Around 2.9 million Singaporeans will receive a total payout of between $700 and $2,250 over the five years of the package.
Summary of vouchers to be received
| Annual Income of less than $13,000 | Annual Income of $13,001 to $21,000 | Annual Income of $21,001 to $22,000 | Annual Income of $22,001 to $34,000 | Annual Income of $34,001 to $100,000 | Annual income of more than $100,000 | ||
|---|---|---|---|---|---|---|---|
|
Cost-of-Living Payments |
$400 | $400 | $400 | $300 | $200 | - | |
| GST Voucher (Dec 2023) |
$700 | $350 | - | - | - | - | |
| GST Voucher (Dec 2024) |
$850 | $450 | - | - | - | - | |
|
Senior Citizen Voucher |
55 to 64 years old | $250 | $200 | - | - | - | - |
|
≥65 years old |
$300 | $200 | - | - | - | - | |
| CDC Vouchers (Jan 2024) |
$300 per household | ||||||
2. Increase in CPF contributions monthly ceiling
There is a CPF monthly salary ceiling for CPF contributions. Currently, both employees and employers contribute a percentage of one's monthly salary towards CPF, capped at the first $6,000 of monthly income.
As announced in Budget 2023, the CPF monthly salary ceiling will be increased from $6,000 to $8,000 in stages by 2026. There will be no change to the CPF annual salary ceiling.
From Sep 2023, the CPF monthly salary ceiling will be raised by $300 to $6,300.
It will then be increased by a further $500 in Jan 2024 to $6,800, $600 in Jan 2025 to $7,400 and $600 in Jan 2026 to $8,000.
This measure was put in place to match the general increase in Singaporeans' wages.
This increase in the CPF monthly salary ceiling is to align CPF savings with wage inflation.
With the higher ceiling, the CPF system will continue to cover workers up to the 80th percentile of the monthly income distribution.
3. Housing grants for first-time buyers
The government has increased the amount of enhanced CPF housing grants first-time buyers of resale flats are eligible for by up to $30,000. First-time home buyers are those who have not received any housing subsidies before.
In order to qualify for these grants, your household income must be $14,000 or less and you cannot own any private property.
Under the new measures, first-time buyers of four-room or smaller resale flats can receive enhanced CPF grants of up to $80,000 and first-time buyers of five-room or larger resale flats can get enhanced CPF grants of up to $50,000. This is up from $50,000 and $40,000 respectively.
Additionally, the Singapore government has increased their efforts to help first-time home buyers with children as well as young married couples under the age of 40 to secure a BTO flat.
A new measure was introduced where the aforementioned groups will get an additional ballot for their BTO flat applications in order to give them a better chance at getting a flat.
4. Increased marginal buyer's stamp duty for higher-value properties
Currently, the portion of a residential property value in excess of $1.5 million is taxed at four per cent.
Under new measures starting Feb 15 2023, this marginal stamp duty has been increased by one per cent to two per cent.
The portion of the value of a residential property in excess of $1.5 million to $3 million will be taxed at five per cent and the portion of the value of a property in excess of $3 million will be taxed at six per cent.
Similarly, for non-residential properties, the portion of the value of the property in excess of $1 million to $1.5 million will be taxed at four per cent.
The portion of the value of the non-residential property in excess of $1.5 million will be taxed at five per cent. This is up from the current rate of three per cent.
5. Increased Baby Bonus and support for new parents
The Baby Bonus Cash Gift will be increased by $3,000 for eligible Singaporean children as of Feb 14, 2023.
Previously, parents received a total of $8,000 in Baby Bonus Cash Gift for their first and second born child each, and $10,000 for their third child and beyond.
After the new adjustments, parents will receive $11,00 for their first and second-born child each, and $13,000 for their third child and beyond.
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The payout schedule has also been amended.
Previously, the cash was disbursed in five installments over the first 18 months after the child was born.
After the new adjustments, parents will receive the cash gift every six months until their child is six and a half years old.
Additionally, the Child Development Account (CDA) First Step Grant will also be increased by $2,000 – from $3,000 to $5,000.
On top of that, the Government will increase its co-matching cap by $1,000 for the first and second-born child.
In exciting news for prospective fathers, government-paid paternity leave will be doubled from two to four weeks for fathers of Singaporean children born from Jan 1, 2024.
Furthermore, each parent will be entitled to 12 days of unpaid infant care leave per year during their child's first two years, which is double the previous entitlement of six days.
6. Higher marginal Additional Registration Fee (ARF) for high-end cars
The ARF rate for high-end cars has been increased.
Cars with an Open Market Value (OMV) of $40,000 or more will now be subject to ARF rates of 320 per cent, up from 220 per cent.
The preferential ARF rebates will also be capped at $60,000 to avoid excessive rebates when these high-end cars are deregistered at the end of life.
7. Increase in tobacco tax
As of Feb 14, 2023, there has been an increase of 15 per cent in excise duty across all tobacco products.
This increase in tobacco tax is expected to generate roughly $100 million in additional revenue per year.
This article was first published in ValueChampion.