Singapore Budget 2022 For Families : Impact on Middle Income Families

 

Singapore Budget has been announced.

The much-anticipated measure of raising GST has come to fruition. GST will increase to 9% over the course of the next 2 years.

With that, it would mean rising costs for the individuals. For families, this impact will be felt most due to the multifold effect on spending for the whole family. To mitigate the rise, some measures were announced for the benefit of families. Given the recent report that median households income is at $9520, we assess how this budget will impact most households.

Household Support Package

1) Double GST Voucher, U Save Rebates for the rest of the year for eligible Households (HDB)

Example:  Household in 3 room flat will get additional $84 in those 3 months, in addition to their regular U-save rebates and ASsurance Package rebate of $84. This takes the total GSTV U Save rebate for FY 2022 to $680 from $425 previously.

2) Additional $200 Top Up Per Child through CDA, Edusave or Post Secondary Education Account

This is for children under 21.

3) All Singapore Households will get another $100 Community Development Council (CDC) voucher

You can use this voucher at participating heartland shops and hawker stalls.

Impact

Most families should benefit from U Save Rebates, top up per child and CDC vouchers. However, the additional support may not amount to much at the end of the day.

Assurance Package

The new $6.6 billion packages will now provide these payouts:

• Cash payout - $700 to $1,600 for every Singaporean aged 21 and above over the next five years.

First payment in December with exact amount dependant on income AND property ownership status

• U-Save rebates - $330 to $570 additional U-Save rebates for eligible households over the next four years.

Applies only to people living in HDB

• GST voucher (Seniors’ Bonus) - $600 to $900 cash payout for eligible seniors aged 55 and above over the next three years.

• MediSave top-ups - $450 top-up over the next three years for Singaporean children aged 20 and below and seniors aged 55 and above.

• CDC vouchers - $400 vouchers ($200 each in 2023 and 2024) for all Singaporean households

The details of the assurance package have not been revealed in terms of the timeline of the individual payout. Nonetheless, this could help to cushion the impact of GST.

More details on assurance package here

Impact of Taxes

GST

GST will increase from 7% to 8 % from Jan 1 2023 and 8% to 9% from Jan 1 2024

Personal Taxes

Personal income tax for those with chargeable income of more than S$500,000 up to S$1 million will go up to 23% in 2024, and 24% tax for that above S$1 million.

Property Taxes

Non-owner-occupied residential properties taxes to go up from 10% to 20% currently, to 12% to 36%.

Owner-occupied residential homes, property tax for the portion of annual value in excess of S$30,000 will be raised, impacting the top 7% of such properties. Tax will raise from 6% to 32 %, up from 4% to 16 %

Impact

The most significant change of Taxes will be GST. This will impact everyone regardless of income. While on a year with 'normal' expenses, it should be manageable, but when one comes to getting big-ticket items such as a house or car, the impact could be significant.

While one does not need to pay GST on residential homes, the cost of building and marketing will increase due to GST leading to an increase in the selling price. Additionally, renovation and furnishing a house will be more expensive due to an increase in GST. Thus, prices would most likely move upwards due to increased costs. As for cars and other big tickets items, GST is unavoidable.

The reality is that cost of living will increase over the long term, regardless of how much payout is provided. Unless wages catch up, there will be an impact on families as a result of this.