SINGAPORE, Feb 23 — Keen to shore up its popularity as election talk rises, the Singapore government today announced a series of measures to support a broad cross-section of society in its budget.

The next election can wait until January 2017. But there is speculation it will be called soon after Singapore celebrates its 50th anniversary of independence in August.

In recent years, Singapore’s electorate has become testy over the high cost of living and a wide gap between rich and poor, prompting the long-ruling People’s Action Party (PAP) to focus on providing more affordable healthcare and extra support measures to the less well-off.

The government is seeking to increase the productivity of Singaporean workers and reduce the country’s reliance on foreign labour, whose presence riles some citizens.

The budget was presented in parliament by Finance Minister Tharman Shanmugaratnam.

The following are some highlights of the budget proposals for the fiscal year that will begin on April 1.

Budget forecasts

- Singapore proposed a budget deficit of S$6.67 billion (RM17.86 billion) in the year that will begin April 1, compared with the originally estimated deficit for the current fiscal year of S$1.16 billion.

- For the current year, which ends on March 31, the government now expects an overall budget deficit of S$130 million.

- Total expenditure in the coming fiscal year is S$68.22 billion, compared with a revised estimate of S$57.20 billion in the current year.

- There will be a primary deficit of S$3.95 billion in the new year, compared with a revised estimate of a S$4.15 billion surplus in the year ending next month.

Personal income tax

- Tharman announced that the government will increase personal income tax rates for the highest bracket to 22 per cent from 20 per cent, effective in 2017 on income earned in 2016.

The highest bracket in Singapore’s system is income that’s above S$320,000 a year.

- Individuals will be given a 50 per cent rebate on the taxes they pay this year on 2014 income, capped at S$1,000.

Inflation

- The finance minister projected inflation of close to 0 per cent seen for calendar 2015. Earlier today, the government announced the consumer price index (CPI) contracted 0.4 per cent in January from a year earlier.

Foreign labour and productivity

- The government will “recalibrate” the pace of increase in foreign worker levies in view of the slower pace of foreign worker inflows, and said this year’s round of announced levy increases for foreign workers in every sector will be deferred.

- The state will “help firms respond to the reality of a permanently tight labour market”.

Central Provident Fund (CPF)

- Government will “help Singaporeans supplement incomes in retirement” by raising the CPF salary ceiling, and the contribution rates for older workers, as well as CPF interest rates for older Singaporeans to benefit those with lower balances.

Growth via mergers and acquisitions

To further support companies, especially small and medium enterprises, to grow via strategic acquisitions, the government is extending its M&A scheme till March 31, 2020.

- The government will increase the tax allowance for acquisition costs from the current 5 per cent to 25 per cent of the value of acquisition. Companies would be able to claim M&A benefits for acquisitions that result in at least 20 per cent shareholding in the target company, down from the current threshold of 50 per cent shareholding.

Petrol duty and road tax rebate

The government is raising petrol duty rates for premium grade petrol by S$0.20 per litre, and intermediate grade petrol by S$0.15 per litre. To ease the transition to the higher petrol duties, the government will provide a one-year road tax rebate of 20 per cent for cars, 60 per cent for motorcycles, and 100 per cent for the small number of commercial vehicles using petrol.

Future growth clusters

- The government identified these as advanced manufacturing, aided by new technologies such as advanced robotics, applied health sciences such as developing new medical devices, and logistics and aerospace.

Support for elderly

- Tharman said additional social security will be provid3ed for elderly retirees under a “Silver Support Scheme” that adds to their income. He said it would help the bottom 20 per cent of Singaporeans aged 65 and above. — Reuters