While the world continues to struggle with Covid-19, Budget 2021 strikes a hopeful tone with its emphasis not only on continued, targeted support, but also a focus on laying the groundwork towards tackling longer-term challenges.
But what do all those new announcements and policy updates mean? Which ones will impact your day-to-day life, and how?
To save you the trouble of wading through the online noise, we’ve captured and summarised five ways Budget 2021 will most likely affect you.
1. Household support: $200 one-off GST vouchers, and more
As part of Budget 2021, Deputy Prime Minister and Minister for Finance Heng Swee Keat announced a Household Support Package costing $900 million.
While the package provides some support for all, lower- and middle-income households will receive more.
This year’s Household Support Package comes in five forms.
GST Voucher – Cash Special Payment: Additional $200 one-off payment for eligible Singaporeans
GST Voucher – U-Save Special Payment: Additional utilities rebate of between $120 to $200 for eligible households
Service & Conservancy Charge (S&CC) Rebate: Extended for another year, all eligible S&CC account holders will receive between 1.5 to 3.5 months worth of rebates
Additional $200 top-up per child to CDA/EduSave/PSEA: Eligible families with children under 21 will receive this one-time top-up
Community Development Council (CDC) Vouchers: All households will receive CDC vouchers with $100 to spend at participating hawker centres and heartland shops.
Most of the announced support measures aren’t new to this year’s Budget. As always, the approach taken by the Government is to help households defray the cost of their bills. The additional cash payout for lower- and middle-income families will go a long way towards riding out the economic impact of the ongoing pandemic.
With the CDC Voucher, which is a new entrant to this year’s announcement, it’s time to #eatlocal and support Singapore’s vibrant hawker culture. Or maybe, donate it to someone in need as another way to help out your community.
GST Voucher – Cash and Cash Special Payment
For 2021, eligible Singaporeans will receive an extra payment of $200, which will be disbursed in June, under the GST Voucher – Cash scheme. This is in addition to the usual GST Voucher – Cash payouts that will be paid out in August.
To be eligible for the payment, you’ll need to be:
– Singaporean, aged 21 and above in 2021
– Have an assessable income of not more than $28,000 for the Year of Assessment 2020
– Annual value of place of residence as reflected on the NRIC as at Dec 31, 2020 must not be more than $21,000
|Scheme||Amount||Estimated pay out date|
|GST Voucher – Cash Special Payment||$200||June|
|GST Voucher – Cash (regular payment)||$300 (annual value of home up to $13,000)|
$150 (annual value of home between $13,001 to $21,000)
GST Voucher – U-Save and U-Save Special Payment
Households continue to receive support for utilities bills via the U-Save scheme.
For 2021, approximately 950,000 households can look forward to double the amount of rebates in April and July, totalling between $120 to $200. This is on top of the normal rebate. Refer to the table below for a summary:
|HDB Flat type||April 2021||July 2021||October 2021||January 2022||Total|
|1- and 2-room||$100 + $100||$100 + $100||$100||$95||$595|
|3-room||$90 + $90||$90 + $90||$90||$85||$535|
|4-room||$80 + $80||$80 + $80||$80||$75||$475|
|5-room||$70 +$70||$70 + $70||$70||$65||$415|
|Exec/Multi-gen||$60 + $60||$60 + $60||$60||$55||$355|
Service & Conservancy Charge (S&CC) Rebate
Extended for another year, all eligible S&CC account holders will receive between 1.5 to 3.5 months worth of rebates
Additional $200 top-up per child to CDA/EduSave/PSEA
Eligible families with children under 21 will receive an additional $200 top-up to their Child Development Account (aged six and below), Edusave Account (aged between seven and 16), or Post-Secondary Education Account (aged between 17 abd 20).
Do note that this is in addition to the Edusave top-up for children in primary and secondary schools.
Community Development Council (CDC) Vouchers
Benefiting about 1.3 million Singaporean households, the CDC Vouchers take a two-pronged approach. The first is to help households subside their spending at hawker centres and heartland shops.
On the other front, local businesses will benefit from these voucher payouts to sustain themselves through a recovering economy in the months to come.
2. Petrol-fueled car owners will have to pay more for petrol
In order to further discourage the use of internal combustion engine (ICE) vehicles, petrol duty has been raised with immediate effect.
Premium petrol will now cost $0.15 more per litre, while intermediate grade petrol will increase by $0.10 per litre.
This is a lower increase compared to the previous round in 2015, when the rates for premium grade petrol and intermediate grade petrol were increased by $0.20 and $0.15 per litre, respectively.
The impact on those who rely heavily on their vehicles for their livelihoods, however, is apparent. Thus, a series of rebates have been announced help Singaporeans through this transition:
|Type of petrol-using vehicle||Rebates|
|Private cars||15% road tax rebate for one year|
|Taxis and Private-hire cars||15% road tax rebate for one year$360 Petrol Duty Rebate disbursed over 4 consecutive months|
|Motorcycles||60% road tax rebate for 1 year$80 Petrol Duty Rebate (200cc and below)$50 Petrol Duty Rebate (201 to 400cc)|
|Commercial vehicles (goods vehicles, buses, etc)||15% road tax rebate for 1 year|
The rebates are estimated to offset one year of petrol duty increases for taxis and motorcycles and about eight months for commercial vehicles and cars.
More details surrounding the additional petrol duty rebates for motorcycles, taxis and private hire cars will be released by the Land Transport Authority (LTA) in April.
This is expected to kick in by the middle of 2021 and it will be disbursed automatically to those who are eligible.
This is only the first of many reasons to give up your petrol-guzzling car for a more eco-friendly and environmentally sustainable electric vehicle. For one, the Additional Registration Fee (ARF) for EVs will be reduced to zero from January 2022 to December 2023.
That gives you slightly less than a year to look through the various car loans that can finance your next Tesla electric car.
3. More opportunities to eat local
A new item in Budget 2021 is a meaty $60 million fund to foster technology adoption in Singapore’s agri-food sector.
While climate change threatens to cause disruptions in worldwide food and water supplies, technology can help to cushion vulnerable agriculture sectors against the worst of these effects.
For example, local high-tech aquaculture fish farm Eco-Ark produces 20 times more food than traditional coastal fish farms, showcasing how its technology contributes to Singapore’s goal of having 30% of all food coming from local suppliers by 2030, thus increasing our resilience.
This, in turn, means more opportunities for you to #eatlocal and #supportlocal, as the fund could pave the way for more homegrown brands to start offering just-as-delicious alternatives to expensive, carbon-dense imported produce.
4. $90bn worth of new bonds for new public and green infrastructure
If the slow-and-steady style of bond investing suits your taste, you’ll be glad to know that you can soon increase your investment in Singapore bonds.
Around $90 billion worth of new bonds will be launched as part of this year’s Budget to help pay for major public infrastructure projects and green initiatives. Some of these earmarked projects include new MRT lines that will increase convenience for the commuting masses in an energy-efficient manner.
On the sustainable front, projects such as the futuristic Tuas Nexus – Singapore’s first integrated solid waste and water treatment facility, as well as sea walls and artificial islands to help defend against rising sea levels, are in the green pipeline.
5. Higher prices for imported goods by 2023
One silver lining to emerge is that the proposed Goods and Services Tax (GST) increase will not take place in 2021, which is definitely good news.
But it’s only a matter of time before the GST hike happens. We can expect the increase to take place sometime between 2022 – 25 (and most probably sooner rather than later.)
The reason behind this is to ensure that Singapore can fund its ongoing economic growth and replenish the heavily-utilised reserves during the pandemic.
Additionally, GST will be extended to cover imported low-value goods. This stems from a desire to help even the playing field for local businesses, who pay GST on goods they import for local sale.
Under the current rules, goods you buy from overseas fall under the GST if the shipment exceeds $400 in value (inclusive of insurance and freight). With the announced change, every item you purchase from overseas will be charged GST.
Given that the change will take place from 1 Jan 2023 onwards, you have slightly less than two years to continue enjoying your favourite low-cost vitamins from iHerb, or bargain basement beauty products from lookfantastic, and other online retailers that ship directly from other countries.
Remember this: we are still in the midst of an ongoing pandemic. This year’s Budget announcement is about Emerging Stronger Together, and needless to say, every single dollar you receive from this year’s Budget needs to be put to good use.
Or at the very least, save it for a rainy day.
This article was first published in SingSaver.
SingSaver is a personal finance comparison platform that allows users to easily compare credit cards, personal loans, and insurance for free, while helping empower people to lead healthier financial lives through increased financial literacy.