Budget 2018 is right around the corner; and while we don't know what exactly it entails, there have been some strong hints to what you can expect from this year's delivery.

Most of the points from Budget 2018 are probably a continuation or refinement of efforts from 2017. So before you catch the full details on the Singapore Budget 2018 website, here are a few points that might be brought up.

Greater emphasis on eldercare

In a recent Straits Times report. Senior Minister of State for Finance, Indranee Rajah, mentioned that more will be spent on healthcare for an aging population. In the year 2000, the number of Singaporeans aged 65 and over numbered 220,000.

Today, that number has doubled to around 440,000, and is expected to hit 900,000 by 2030.

At age 65 and over, healthcare costs tend to increase, while the ability of patients to make payments decreases  as most are retired by that point). Insurance premiums also rise significantly with age, such as premiums for Integrated Shield Plans (IPs).

As such, the amount of government subsidies will have to increase.

It's possible that we'll see a top-up to Medisave for senior citizens; not only to cope with rising healthcare costs, but also because many older Singaporeans had lower CPF rates in their working days.

However, it doesn't end with monetary support.

The financial aspects of eldercare were already an issue in previous budgets, with schemes like the Pioneer Generation Package and Silver Support Scheme. The current focus seems to be on building community support for senior citizens.

The government will take its cue from a 2016 eldercare initiative, the Community Networks for Seniors. This seems to focus on the pooling of shared resources, to look after the elderly. We might see more support for "ageing hubs", or services that cater to senior citizens in the heartlands. We feel that any funds will go toward creating self-sufficient programmes, such as regular charity drives, rather than direct government pay outs. This would provide long term funds for eldercare, without relying on the need to just hike taxes.

The Goods and Services Tax (GST) is likely to increase

All the healthcare subsidies must be funded from somewhere. We've also heard hints in the news about rising GST rates. So far, the GST has remained at seven per cent for around a decade; we wouldn't be surprised to see it climb to nine per cent.

The GST has a redistributive effect - the government has long given GST offset vouchers to lower income families, which basically shifts money from wealthier Singaporeans to poorer ones. If there's a GST rate hike, we may see a commensurate amount of relief for lower income families, but not so much help for middle or upper-income Singaporeans.

Prime Minister Lee Hsien Loong also mentioned the danger of our growing income inequality. This can lead to a class divide, which prompts social disharmony. Singapore's GINI Coefficient (the measure of income inequality) is one of the highest in the developed world - and it's an issue that has to be addressed sooner or later.

Raising the GST on better-off Singaporeans, while distributing the proceeds toward poorer ones, is a step toward solving it.

(Note: this doesn't necessarily mean lower income families will get more GST vouchers. It could translate to funding for more education programmes, such as the SkillsFuture programme, to promote social mobility).

More support for young families, particularly for childcare

In this article on possible ecommerce taxes, Ms. Indranee Rajah also mentions support for young families. Specifically, with "pre-school education and support for young children continuing to be a focus".

At present, the Early Childhood Development Agency (ECDA) offers subsidies for childcare in its licensed centres. The subsidies are based on a family's per capita income, or gross monthly household income. There's also an Additional Subsidy (AS) for families with mothers who work at least 56 hours per month, and are in households where the monthly income does not exceed $7,500. We expect that Budget 2018 will either increase the existing subsidies, or expand the scheme to include more Singaporeans.

Taxes on ecommerce

Ecommerce businesses may fall under the same tax schemes as regular businesses. At present, this is a flat 17 per cent tax on income. This is supposed to equalise the playing field between brick and mortar shops, and retail websites.

As the government has been studying this for a while, we feel it may finally be implemented this around.

Continuation or revision of government business grants

Budget 2018 is going to continue what we've already seen from previous Budget years. International Enterprise (IE) Singapore is set up to help local Small to Medium Enterprises (SMEs) go global. As far back as 2015, there's been a concessionary tax rate of 10 per cent (instead of 17 per cent) for businesses that are attempting to go international.

Budget 2017 saw a further $100 million invested, to help companies expand abroad via the Global Innovation Alliance. We're likely to see tweaks and refinements to these programmes.

It's particularly important for Singaporean SMEs to venture abroad, as the domestic market alone is too small to create many corporate giants (Big corporations pay millions of tax dollars to support our infrastructure, housing, healthcare, etc., which is why creating more of them is such a priority.)

A Budget for everyone

Like it or not, Budget 2018 has its effect, whether you're in the elderly bracket, low to middle income family or fall under an entrepreneur that has to deal with the new taxations.

It's important to keep your personal finances in check. To that end, always consider where the money comes from and goes to, and no matter what comes out of this year's Budget, you'll be in good hands.

GoBear team

Brought to you by GoBear Insurance Broker (SG) Pte. Ltd., a registered insurance broker with the Monetary Authority of Singapore

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