SINGAPORE: There is still "considerable" uncertainty about how the Singapore government’s revenues will change in the coming decades, but the country's fiscal position is expected to be roughly balanced until 2030, said Prime Minister and Finance Minister Lawrence Wong on Tuesday (Feb 18).
He said this in his Budget 2025 speech, while also noting a significant increase in corporate income tax revenue in the last two years.
The government collected S$30.9 billion (US$23 billion) from corporate income taxes in 2024, up 10.2 per cent compared with the estimated figure.
Corporate income taxes used to make up around 3.2 per cent of gross domestic product (GDP), but are expected to reach 4.1 per cent of GDP in the financial year 2024.
“This is an unexpected change,” said Mr Wong. “Corporate income tax is now the single largest contributor to total revenue, larger than even the net investment returns contribution.”
Part of the reason is industry-specific cyclical factors in finance and wholesale trade, he added.
But he cautioned it was too early to know if the increase in corporate income tax collection was a temporary or lasting trend.
Mr Wong said there could be some additional revenue from corporate income taxes from financial year 2027 onward when a domestic top-up tax is implemented, which would raise the effective tax rate for large multinational companies to 15 per cent.
“But how much revenue we will get from this change depends on whether these MNEs continue to find it attractive to remain in Singapore.”
Mr Wong also said there was
“It remains to be seen what further moves the US and other major economies will make in this new geopolitical environment,” he said, adding that Singapore will assess its options and adjust policies where necessary.
While government revenues down the line remain a question mark, expenditure has been rising steadily and now makes up around 18 per cent of GDP, said Mr Wong.
That figure is expected to increase to 20 per cent by around 2030, based on historical trends.
“With growing global uncertainties, and the need to invest more in our workers and better support our rapidly ageing population, there will be added pressure to raise spending, possibly at a pace that exceeds previous increases,” he said.
The government will continue to monitor fiscal trends closely and update Singapore’s medium-term projections, said Mr Wong.
“In the meantime, we will spend responsibly and ensure resources are allocated effectively.”
If and when there is more revenue, Singapore will put it to “good use”, said the Prime Minister.
Singapore's revenue for 2025 is estimated to be S$122.8 billion (US$91.4 billion), 5.3 per cent or S$6.2 billion more than the previous year’s revised estimates.
The increase is expected to come from increased collections from corporate income tax, personal income tax, goods and services tax (GST), customs excise and carbon taxes, and others.
Total expenditure is estimated to be S$123.8 billion, up 9.6 per cent or S$10.9 billion from the revised 2024 figure.
When ministry expenditure is combined with other components such as special transfers and the impact of the Significant Infrastructure Government Loan Act is taken into account, the estimated size of this year’s Budget is S$143.1 billion, up from S$134.2 billion last year.
The biggest increases in government expenditure are from the Ministry of Health, the Ministry of Defence and the Ministry of Trade and Industry.
Social spending is expected to take up around half of the expenditure at S$61.3 billion. Security and external relations will cost S$33.2 billion, while economic spending is set to come in at S$24.5 billion. Government admin is projected to cost S$4.7 billion.
The net investment returns contribution (NIRC) is expected to bring in S$27.1 billion this year, 12.9 per cent more than the revised amount for 2024.
Overall, the final budget position is expected to come up to a surplus of S$6.8 billion, or 0.9 per cent of GDP.
That is around the same level as the surplus for the previous financial year, which was revised to S$6.4 billion, up from the estimate of about S$800 million.
The government collected more revenue than anticipated in financial year 2024, with operating revenue rising to S$116.6 billion, 7.3 per cent or S$8 billion more than estimated.
Total expenditure increased 1 per cent or S$1.2 billion to S$112.9 billion, driven in part by public housing needs and defence spending.
The government spent less than expected on healthcare as there were reduced requirements related to COVID-19, and a lower-than-expected take-up rate for community care salary enhancement schemes.
“A critical enabler for Singapore’s continued success is sound and healthy public finances,” said Mr Wong. “We achieve this by living within our means and running a balanced budget over each term of government.
"This means spending prudently to meet our immediate and future needs, ensuring that our revenues cover expenditures, and keeping the tax burden as low as we can, while not burdening Singaporeans with debt."
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He said this in his Budget 2025 speech, while also noting a significant increase in corporate income tax revenue in the last two years.
The government collected S$30.9 billion (US$23 billion) from corporate income taxes in 2024, up 10.2 per cent compared with the estimated figure.
Corporate income taxes used to make up around 3.2 per cent of gross domestic product (GDP), but are expected to reach 4.1 per cent of GDP in the financial year 2024.
“This is an unexpected change,” said Mr Wong. “Corporate income tax is now the single largest contributor to total revenue, larger than even the net investment returns contribution.”
Part of the reason is industry-specific cyclical factors in finance and wholesale trade, he added.
But he cautioned it was too early to know if the increase in corporate income tax collection was a temporary or lasting trend.
Mr Wong said there could be some additional revenue from corporate income taxes from financial year 2027 onward when a domestic top-up tax is implemented, which would raise the effective tax rate for large multinational companies to 15 per cent.
“But how much revenue we will get from this change depends on whether these MNEs continue to find it attractive to remain in Singapore.”
Related:
CHANGES IN GLOBAL TAX ENVIRONMENT
Mr Wong also said there was
“It remains to be seen what further moves the US and other major economies will make in this new geopolitical environment,” he said, adding that Singapore will assess its options and adjust policies where necessary.
While government revenues down the line remain a question mark, expenditure has been rising steadily and now makes up around 18 per cent of GDP, said Mr Wong.
That figure is expected to increase to 20 per cent by around 2030, based on historical trends.
“With growing global uncertainties, and the need to invest more in our workers and better support our rapidly ageing population, there will be added pressure to raise spending, possibly at a pace that exceeds previous increases,” he said.
The government will continue to monitor fiscal trends closely and update Singapore’s medium-term projections, said Mr Wong.
“In the meantime, we will spend responsibly and ensure resources are allocated effectively.”
If and when there is more revenue, Singapore will put it to “good use”, said the Prime Minister.
THE BUDGET IN NUMBERS
Singapore's revenue for 2025 is estimated to be S$122.8 billion (US$91.4 billion), 5.3 per cent or S$6.2 billion more than the previous year’s revised estimates.
The increase is expected to come from increased collections from corporate income tax, personal income tax, goods and services tax (GST), customs excise and carbon taxes, and others.
Total expenditure is estimated to be S$123.8 billion, up 9.6 per cent or S$10.9 billion from the revised 2024 figure.
When ministry expenditure is combined with other components such as special transfers and the impact of the Significant Infrastructure Government Loan Act is taken into account, the estimated size of this year’s Budget is S$143.1 billion, up from S$134.2 billion last year.
The biggest increases in government expenditure are from the Ministry of Health, the Ministry of Defence and the Ministry of Trade and Industry.
Social spending is expected to take up around half of the expenditure at S$61.3 billion. Security and external relations will cost S$33.2 billion, while economic spending is set to come in at S$24.5 billion. Government admin is projected to cost S$4.7 billion.
The net investment returns contribution (NIRC) is expected to bring in S$27.1 billion this year, 12.9 per cent more than the revised amount for 2024.
Overall, the final budget position is expected to come up to a surplus of S$6.8 billion, or 0.9 per cent of GDP.
That is around the same level as the surplus for the previous financial year, which was revised to S$6.4 billion, up from the estimate of about S$800 million.
The government collected more revenue than anticipated in financial year 2024, with operating revenue rising to S$116.6 billion, 7.3 per cent or S$8 billion more than estimated.
Total expenditure increased 1 per cent or S$1.2 billion to S$112.9 billion, driven in part by public housing needs and defence spending.
The government spent less than expected on healthcare as there were reduced requirements related to COVID-19, and a lower-than-expected take-up rate for community care salary enhancement schemes.
“A critical enabler for Singapore’s continued success is sound and healthy public finances,” said Mr Wong. “We achieve this by living within our means and running a balanced budget over each term of government.
"This means spending prudently to meet our immediate and future needs, ensuring that our revenues cover expenditures, and keeping the tax burden as low as we can, while not burdening Singaporeans with debt."
Continue reading...