SINGAPORE – Revenue collected for the national coffers for fiscal year (FY) 2023 was better than expected, mainly due to higher corporate income tax collections, Deputy Prime Minister Lawrence Wong said in his Budget speech on Feb 16.
The Ministry of Finance (MOF) noted that companies paid more in corporate income tax – $28.4 billion, or $4.1 billion higher than was estimated – as economic growth in 2022 was stronger than expected. On the other hand, goods and services tax (GST) collections came in $1 billion lower than estimated, at $16.4 billion, due to weaker imports.
The additional revenue will help fund new spending such as the $7.5 billion injection to the Majulah Package Fund for the scheme announced in August 2023, which pushed expenditure in FY2023 higher than expected.
DPM Wong said that accounting for both the revenue upside and higher spending, the Budget deficit for FY2023 has been revised to $3.6 billion. It had been projected to be $0.4 billion.
For FY2024, a small surplus of $0.8 billion, or 0.1 per cent of gross domestic product (GDP), is expected, said DPM Wong, who is also Finance Minister. “The overall stance is appropriate, as we are providing targeted support for households and businesses, even as the economy is projected to operate at around potential,” he told Parliament.
He also said: “Assuming we stay within this range of spending increase, we should have sufficient revenues to maintain a balanced budget over the coming years.”
MOF’s projection for government spending to increase to around 20 per cent of GDP by 2030 still stands, he said.
According to MOF, total government expenditure for FY2024 is expected to rise 4.6 per cent from FY2023, to $111.8 billion. This is 15.5 per cent of GDP.
Out of the 16 ministries in Singapore, 13 are projecting higher expenditure. Among them, the Transport, Health and Education ministries are expected to have the largest increases in spending in FY2024, in terms of the absolute amounts.
Some of the contributing factors are the development of the domestic rail network, the opening of Sembawang and Tampines North polyclinics, and the resumption of school building projects that were previously delayed by the Covid-19 pandemic.
Also, the Ministry of Law’s estimated budget of $700 million is more than double what it spent in FY2023, mainly due to projected land acquisition and development.
On the other hand, the Ministry of Manpower and Ministry of Trade and Industry are expected to spend slightly less in FY2024, compared with in FY2023. This is largely due to the ending of the Jobs Growth Incentive scheme, and lower requirements for the Economic Development Board’s Economic Development Assistance Scheme.
Meanwhile, the Government is expecting operating revenue of $108.6 billion in FY2024, which is up by 4.2 per cent over the revised FY2023 figure. MOF said revenue will be driven by higher GST collections, which are expected to hit $19.4 billion, representing an 18.5 per cent rise year on year.
Assets taxes are also estimated to increase by 12.8 per cent to $6.7 billion due to a hike in property tax rates which took effect on Jan 1, 2024, and expected higher property annual values.
The Net Investment Returns Contribution is projected to rise to $23.5 billion in FY2024. Under the Net Investment Returns framework, the Government can spend up to half of the long-term expected real returns generated from the investment of Singapore’s reserves.
An additional $4.1 billion of fiscal space was freed up in the FY2024 Budget through the Significant Infrastructure Government Loan Act, or Singa, which allows the Government to spread out spending on projects such as the North-South Corridor, Deep Tunnel Sewerage System, Cross Island Line and Jurong Region Line across generations.
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