Budget 2011 Key Budget Initiatives 1

Budget 2011 Key Budget Initiatives 1

BENEFITS for households

Total Benefits Package $6.6 Billion

(1)One-off Benefits for Households:

$3.2 Billion ‘Grow & Share’ Package

To share the fruits of last year’s exceptional economic growth, the Government will distribute a total of $3.2billion in one-off benefits to all Singaporean households under the ‘Grow & Share’Package. It will benefitall Singaporeans, the lower- and middle-income families significantly more. This will help them offset the rise in inflation.

(A) Rewarding Working Singaporeans

(A1) Workfare Special Bonus[$224 million in FY2011, $226 million over 2 years thereafter]

A one-off Special Bonus will be paid out to those on the Workfare Income Supplement (WIS) scheme. The Workfare Special Bonus will amount to 50% more WIS payment for work done in 2010, and 25% more WIS payment each year for work done in 2011 and 2012. Employeeswill receive these bonuses entirelyin cash. The first payout is on 15 May 2011.

Self-employed persons (SEPs) who make their Medisave contributions will also benefit. They will receive half of their bonus in cash, and half in their CPF Medisave accounts.

This Bonus will benefit about 400,000workers.Employees contributing to CPF will receive the bonus payments automatically. They do not need to do anything. Self-Employed Persons will have to make their Medisave contributions.

(A2) Personal Income Tax Rebate[$580 million for YA2011]

The Government will provide for YA2011, a personal income tax rebate of 20% for individual resident taxpayers, capped at $2,000. The cap allows us to give the greatest benefits for those with chargeable income of less than $120,000.

Taxpayers do not have to apply for the tax rebate. The Inland Revenue Authority of Singapore (IRAS) will take into account the rebate when computing the tax bill for YA 2011. The amount of rebate will be shown in the income tax bill.

(B) Supporting Families with Children

(B1) Child Development Credit[$93 million]

The Government will introduce a new Child Development Credit scheme for all Singaporean children aged six and below. The Credits will help parents pay fortheir children’s pre-school, childcare, and medical expenses.

Annual Value of Home in 2010*
Up to $13,000 / More than $13,000
Child Development Credit / $400 / $300

*As at 31 Dec 2010. HDB flats and some private residences have annual values of less than $13,000.

The Child Development Credit scheme will benefit over 220,000 children aged six and below, including children born in 2011. 80% will receive the higher amount of $400.

The Credit will be paid into the Children Development Accounts (CDAs), which most children already have. For those who do not currently have CDAs, they will be able to open new accounts to receive their Credits. MCYS will send letters to parents of eligible children to notify them by June 2011. Payment will start from July 2011.

(B2) Top Up to School Advisory Committees/ School Management Committees Fund and SPED School Boards[$5 million]

The Government will provide a one-off top-up of $4.7 million to School Advisory Committees’ and School Management Committees’funds. Each schoolwill receive between $10,000 and $15,000, enough to cover about half of what they spend each year to help needy Singaporean students.

The VWO-run Special Education (SPED) schoolswill also be given an average of $15,000 per school to help needy Singaporean students.

(C) Providing the Best Care for Our Seniors

(C1) Top up to CPF Medisave Accounts[$504 million]

The Government will top-up the CPF Medisave Accounts of Singaporeans aged 45 and above. The Medisave top-ups will benefit approximately 1.3 million Singaporeans.

Singaporeans who have previously signed up for and received their GST Credits will automatically receive the top-up. They do not need to do anything. Letters will be sent to Singaporeans by mid April 2011 informing them of their eligibility. They can expect to receive their CPF Medisave top-ups by 1 May 2011.

AssessableIncome for YA 2010 / Annual Value of Residence (as at 31 December 2010)
Up to $7,000 / More than $7,000
Up to $30,000 / Aged 45-49:
$300
Aged 50-59:
$400
Aged 60-69:
$500
Aged 70-79:
$600
Aged 80+:
$700 / Aged 45-49:
$200
Aged 50-59:
$300
Aged 60-69:
$400
Aged 70-79:
$500
Aged 80+:
$600
$30,001 to $100,000

(D) Helping the Needy

(D1) Additional Funding to Voluntary Welfare Organisations and Self-Help Groups [$30 million over two years]

The Government will provide an additional $20 million to help Voluntary Welfare Organisations (VWOs) with the professional development of their social workers. Self-Help Groups will receive an additional $10 million over the next two years.

(E) Additional Measures in the ‘Grow & Share’ Package

(E1) Growth Dividends[$1.5 billion]

Growth Dividends will be given to all adult Singaporeans. The amount that each Singaporean will receive is based on his income and the value of his home, shown below:

AssessableIncome for Year of Assessment 2010 / Annual Value of Residence (as at 31 December 2010)
Up to $7,000 / $7,001 to $13,000 / More than $13,000
Up to $30,000 / $800 / $600 / $300
$30,001 to $100,000
More than $100,000 / $100
NSFs/NSmen / +$100

The Growth Dividends will benefit about 2.5 million Singaporeans. Singaporeans will receive their Growth Dividends by 1 May 2011. The majority will receive the dividends automatically, as they have previously signed up for their GST Credits. Letters will be sent out by mid April 2011 informing them of their eligibility.

(E2) Utilities-Save and Service and Conservancy Charges Rebates[$194 million]

To help households cope with rising costs, additional Utilities-Save (U-Save) and Service and Conservancy Charges (S&CC) rebates will be given this year, on top of those given under the 2007 GST Offset Package. In total, households will receive the following rebates:

HDB flat type / U-Save rebate ($) / S&CC rebate (No. of months)
1 room / $360 / 3.0 months
2 room / $360 / 3.0 months
3 room / $340 / 2.0 months
4 room / $320 / 2.0 months
5 room / $270 / 1.5 months
Executive / $235 / 1.0 month

These rebates will benefit 800,000 households.Eligible households will be notified by April 2011, they need not do anything to receive the rebates.

Summary of ‘Grow & Share’ Package: $3.2 billion

Grow & Share Package / Total cost
Growth Dividends / $1,549 million
Personal Income Tax Rebate / $580 million
CPF Medisave Top-up / $504 million
Workfare Special Bonus / $224 million
Additional U-Save Rebates / $163 million
Child Development Credit / $93 million
Additional S&CC Rebates / $31 million
Top-up to Self-help Groups, Voluntary Welfare Organisations, SAC/SMC funds & SPED schools / $30 million
Total / $3.2 billion

More details on the ‘Grow & Share’ Package will be sent to you by mid April 2011. You can also call 1800 2222 888 (Mondays to Fridays: 0800 – 1800hrs) for more information on the Package.

(2)Longer-Term Social Investments to Benefit Households:

$3.4 Billion as Top-ups

(A) Providing the Best Care for Our Seniors

(A1) ElderCare Fund Top-Up[$700 million]

In view of the greater needs of the long term care sector, the Government will top up the Eldercare fund by $700 million to reach the target fund size of $2.5 billion. The target size will also be raised to $3 billion.With this top-up, the Government will provide a 40% increase in funding to support Voluntary Welfare Organisations (VWOs) in this sector.

(A2) Community Silver Trust[$1 billion]

The Government will introduce a new initiative, the Community Silver Trust, to bring in the support of philanthropists and the community to develop the long term care sector. The Government will put $1 billion into the Trust and provide one-to-one matching for donations to VWOs that provide long term care to Singaporeans.

(A3) Medifund Top-Up[$500 million]

The Medifund endowment currently stands at $1.9 billion. The Government will provide a top-up of $500 million to Medifund. In addition, the Government will raise the target size from $2 billion to $3 billion.

(B) Helping The Needy

(B1) ComCare Fund Top-Up[$500 million]

The ComCare Fund now stands at $800 million. It will be topped up by $500 million. The Government will also raise the target size from $1 billion to $1.5 billion. The income from this larger fund will ensure that there is no lack of support for needy Singaporeans, even in years when our economy is down.

(C) Lifelong Learning

(C1) Lifelong Learning Endowment Fund[$500 million]

The Government will make a $500 million top-up to the Lifelong Learning Endowment Fund (LLEF), increasing the fund size to $3.6 billion. This will increase the base level of long term assured funding for Education and Training (CET), to complement the Government’s allocations from future annual budgets.

Summary of Fund Top-ups for Households

Fund Top-ups / Total cost
Community Silver Trust / $1,000 million
Lifelong Learning Endowment Fund / $500 million
ElderCare Fund / $700 million
Medifund / $500 million
ComCare Fund / $500 million
Workfare Special Bonus for FY2012 & FY2013 / $226 million
Total / $3.4 billion

Permanent Shifts in Taxes and Subsidies

(A) Boosting Skills and Productivity

(A1) Training Support for Professionals, Managers, Executives and Technicians(PMETs)

The Government will strengthen support for professional, managers, executives and technicians (PMETs) who wish to upgrade themselves:

• Increase both the capacity and quality of CET for PMETs.The Ministry of Education will expand the capacity for diploma-level programmes at our polytechnics by about 60%, to about 10,000 places by 2015. The Ministry of Manpower will also introduce an umbrella programme for PMETs, Skills Training for Excellence Programme (STEP).

• Increase subsidies for Singaporean adults who pursue their first degree or diploma on a part-time basis at any of our polytechnics, CET centres, universities or UniSIM. They will receive the same percentage subsidy on their part-time courses as what a full-time student currently enjoys.

• Trainees who obtain their first part-time polytechnic diploma, ITE NITEC or Higher NITEC certificate will benefit from increased subsidies through a completion award. Those who complete their firstWorkforce Skills Qualification (WSQ) diploma or certificate can also qualify for the award.This award will be applicable to Singaporeans who graduate from 1 March 2011.

About 30,000 PMETs will benefit from these subsidies. More details on these initiatives will be announced by the Ministry of Education and the Ministry of Manpower at their Committee of Supply.

(B) Rewarding Working Singaporeans

(B1) Reduction of Personal Income Taxes

To reduce taxes further for middle- and upper-middle income taxpayers, the personal income tax schedule will be restructured to make it more progressive. Marginal tax rates will be reduced for the first $120,000 of chargeableincome.

These personal income tax changes will take effect from YA2012.

The new tax schedule is shown below:

Current Tax Structure / Tax Structure with effect from YA 2012
Chargeable Income* ($) / Tax Rate (%) / Gross Tax Payable ($) / Chargeable Income* ($) / Tax Rate (%) / Gross Tax Payable ($)
On the first / 20,000 / 0 / 0 / On the first / 20,000 / 0 / 0
On the next / 10,000 / 3.5 / 350 / On the next / 10,000 / 2 / 200
On the first / 30,000 / - / 350 / On the first / 30,000 / - / 200
On the next / 10,000 / 5.5 / 550 / On the next / 10,000 / 3.5 / 350
On the first / 40,000 / - / 900 / On the first / 40,000 / - / 550
On the next / 40,000 / 8.5 / 3,400 / On the next / 40,000 / 7 / 2,800
On the first / 80,000 / - / 4,300 / On the first / 80,000 / - / 3,350
On the next / 80,000 / 14 / 11,200 / On the next / 40,000 / 11.5 / 4,600
On the next / 40,000 / 15 / 6,000
On the first / 160,000 / - / 15,500 / On the first / 160,000 / - / 13,950
On the next / 160,000 / 17 / 27,200 / On the next / 40,000 / 17 / 6,800
On the next / 120,000 / 18 / 21,600
On the first / 320,000 / - / 42,700 / On the first / 320,000 / - / 42,350
In excess of / 320,000 / 20 / In excess of / 320,000 / 20

* Chargeable income = Income after tax reliefs

Under this new tax structure, all taxpayers will pay less personal income tax, withmiddle-income earners enjoying the largest percentage reduction in their taxes:

ChargeableIncome / Tax Payable under New Schedule / Tax Savings
% ($)
$40,000 / $550 / 39% ($350)
$60,000 / $1,950 / 25% ($650)
$120,000 / $7,950 / 20%($1,950)
$160,000 / $13,950 / 10% ($1,550)
$240,000 / $27,950 / 4% ($1,150)
More than $330,000 / More than $44,350 / Less than 0.8% ($350)

(B2) Removing Radio and Television Licence Fees

The radio and television licence fees - $110 annually for televisionsand $27 annually for vehicle radios - will be removed permanently from this year. Those who have yet to pay this year’s radio and television licence fees will not have to make payment, while a refund will be given to those who have already paid.

(B3) Raising Employer CPF Contribution Rate

The employer CPF contribution rate will be raised by 0.5 percentage points, bringing the total CPF contribution rate to 36%.The additional 0.5% will go into the Special Account.

(B4) Revision to CPF Salary Ceiling

The CPF salary ceiling will be revised from $4,500 to $5,000 per month to keep pace with income growth in recent years.

Both the changes in the contribution rate and salary ceiling will take effect in September 2011, to give employers sufficient time to adjust to the changes.

(B5) Adjustment of Contribution Cap of Supplementary Retirement Scheme

In line with the higher CPF ceiling, the contribution cap of the Supplementary Retirement Scheme (SRS) will be increased.

(B6) Helping Self-Employed Persons

To help self-employed persons (SEPs) increase their savings under the CPF scheme, the Government will grant tax deduction to eligible companies that make voluntary contributions to the Medisave accounts of their SEPs partners, up to $1,500 per SEP per year. SEPs will be exempted from paying tax on these contributions. This will take effect from YA2012.

(C) Supporting Families with Children

(C1) Kindergarten Financial Assistance Scheme and Centre-based Financial Assistance Scheme for Childcare

The Government will also give additional support to lower-income families by enhancing subsidies for preschool education and childcare fees. The Kindergarten Financial Assistance Scheme (KiFAS) and the Centre-based Financial Assistance Scheme for Childcare (CFAC) currently provide large subsidies for children from low-income families.

KiFAS and CFAC will be enhanced and extended to include familieswith up to $3,500 in gross monthly household income (40th percentile). These enhancements will double the children who benefit from KiFAS and CFAC to 24,000.

More details will be provided during the Ministry of Community Development, Youth and Sports Committee of Supply.

(C2) Ministry of Education Financial Assistance Scheme for SPED Schools

The Government will extend the Ministry of Education Financial Assistance Scheme to pupils from lower-income households in the VWO-run Special Education (SPED) schools. It will mean that SPED students from these families will be fully subsidised for their school fees, uniforms, and textbooks, and receive a 75% subsidy on their examination fees.

(C3) Enhanced Bursaries for Polytechnic and University Students

The Government will increase undergraduate and diploma bursaries to ensure no student is discouraged from taking his education as far as possible:

• The Government will raise bursaries for students in our universities, polytechnics, NAFA and LaSalle. Bursaries will be provided for students from both lower- and middle-income families, up to the 66thpercentile of household incomes.

• University students who get the first tier of bursaries, who are those from the bottom one-third of households, will benefit from an 80% increase in bursaries, from $1,600 a year currently to $2,900 a year. These subsidies will cover 40% of their fees, and the students can finance the rest of the cost with a subsidised loan.

• For polytechnic students, those from the bottom one-third of households will receive bursaries that are enough to cover 80% of their fees.

More details will be available in the Ministry of Education Committee of Supply.

(D) Providing the Best Care for Our Seniors

(D1) Programmes to help the Elderly Immobile

The Government will provide additional financial support for low-income elderly people to obtain assistive devices that improve their mobility and independence, such as wheelchairs and walking-frames. The Government will set aside $10 million this year for community organisations to tap on for this purpose. The Ministry of Health will outline the details of this initiative in the COS.

(E) Helping the Needy

(E1) Public Assistance and Singapore Allowance

The Public Assistance (PA) scheme, which provides financial aid to those who are permanently unable to work, will be revised to take into account recent increases in household costs, and to provide a buffer for possible spikes this year, for example in food prices. For a single-person household, PA rates will be raised from $360 to $400 a month. Corresponding adjustments will be made for larger households and those with children.

More details will be provided during the Ministry of Community, Youth and Sports Committee of Supply.

The Government will also increase the Singapore Allowance by $20 per month to $260. This will raise the monthly pension ceiling to $1,190 and benefit about 10,000 pensioners.

(E2) EnhancedTax Deduction for Donation to Institutions of Public Character

The Government will extend for another five years the 250% tax deduction for contributions to Institutions of Public Character (IPC) that was introduced in 2009.

(F) Enhancing Homes and Our Quality of Life

(F1) Special CPF Housing Grant

The Government will introduce a Special CPF Housing Grant (SHG) to help low income families making a first-time Build-to-Order (BTO) flat purchase, on top of the existing Additional CPF Housing Grants (AHG). The SHG will be provided to families who earn up to $2,250 per month. The SHG, together with our other subsidies, will allow more low-income families per year to own their own homes.

Details of this new scheme will be provided during the Ministry of National Development Committee of Supply.

(F2) Rejuvenating our Heartland

$10 billion will be committed to upgrade homes and rejuvenate estates over the next 10 years. This is a major effort to preserve the value of our HDB flats. Under the Home Improvement Programme (HIP), Neighbourhood Renewal Programme (NRP) and Lift Upgrading Programme (LUP), the Government will invest up to $55,000 per flat.

(F3) Building a Vibrant Arts and Culture Environment

To complement the transformation of our estates and enhance our quality of life, the Government will significantly increase spending on arts and culture to bring arts and culture within reach of more Singaporeans, and add depth and vibrancy to the arts scene. Over the next five years, our average annual programme spending will be approximately $365 million, a 50% increase over the current level.

(F4) Miscellaneous Tax Initiatives - Extend Green Vehicle Rebate Scheme

The Green Vehicle Rebate Scheme will be extended for another year until 31 December 2012.

Summary of Other Longer-Term Benefits for Households