Budget: mainly centered on households (this being an election year) and SMEs (to improve productivity and growth). Overall limited impact on large cap listed companies, though land transport stocks, conglomerates and construction companies likely to see higher labor costs (+2.2% by 2013), driven by higher CPF contribution and foreign worker levies...
i) Income taxes reduced
Adjustments to the personal income tax structure, effective YA2012, is focused on support for low-middle income families. Those earning $40k will see a 39% reduction in income taxes; however those in the top income bracket will only see a 0.8% reduction. Furthermore, all taxpayers this year will receive a 20% rebate, up to $2k. Families will also receive greater support as childcare grants and various other accounts (such as Medisave) will be increased.
Businesses will also see a reduction to income taxes, but benefit mainly SME’s, as rebates will be capped at S$10k.
Increase in employer contribution rate by 0.5% to 16%, which goes into the Special Account. This is expected to raise labor costs by 0.5%.
CPF contribution ceiling raised to $5000/mth from $4500/mth, leading to up to $1700 reduction in annual take home pay.
iii) foreign worker levy
Raised to $60-200/ worker, expected to raise labor costs by 1.7%.
iv) Growth dividends:
Distribution of btwn $100-800 for Singaporeans. Expect some of this to flow into consumer goods and services.
v) radio and TV licenses
To be scrapped.