2016 Singapore Budget will have surplus of $3.45 billion[

MAR 24, 2016

Ann Williams

SINGAPORE - The Singapore Government will be spending $5 billion more in this year's budget but will still achieve a $3.45 billion surplus - thanks to a run of high COE prices and the inclusion for the first time of investment returns from Temasek Holdings.

Just don't expect this to last, Finance Minister Heng Swee Keat warned in his Budget announcement on Thursday (March 24).

The Government's total spending for fiscal 2016 will go up by $5 billion or 7.3 per cent, to $73.4 billion from $68.4 billion a year ago.

But this will be more than offset by two things - Temasek's contribution and the Government's operating revenue rising by $4.28 billion, or 6.7 per cent, to $68.4 billion.

Overall Budget Balance

	Revised FY2015	Estimated FY2016	Change over Revised FY2015
	$billion	$billion	$billion	% change
OPERATING REVENUE	64.16	68.44	4.28	6.7
Corporate Income Tax	13.85	13.41	(0.43)	(3.1)
Personal Income Tax	9.13	10.13	1.00	10.9
Withholding Tax	1.31	1.33	0.02	1.4
Statutory Boards’ Contributions	0.43	1.88	1.45	333.0
Assets Taxes	4.39	4.40	0.00	0.1
Customs and Excise Taxes	2.56	2.91	0.35	13.6
Goods and Services Tax	10.33	10.62	0.29	2.8
Motor Vehicle Taxes	1.80	2.93	1.14	63.3
Vehicle Quota Premiums	5.41	5.65	0.25	4.6
Betting Taxes	2.71	2.72	0.01	0.4
Stamp Duty	2.73	2.52	(0.21)	(7.6)
Other Taxes	5.88	6.33	0.45	7.6
Other Fees and Charges	3.29	3.32	0.02	0.7
Others	0.35	0.30	(0.05)	(14.3)
Less:
TOTAL EXPENDITURE1	68.41	73.43	5.02	7.3
Operating Expenditure	48.73	54.43	5.70	11.7
Development Expenditure	19.68	19.00	(0.68)	(3.5)
PRIMARY SURPLUS / DEFICIT2	(4.25)	(4.99)
Less:
SPECIAL TRANSFERS3	10.54	6.27	(4.27)	(40.5)
Special Transfers Excluding Top-ups to Endowment and Trust Funds	4.54	2.67
BASIC SURPLUS / DEFICIT4	(8.78)	(7.66)
Top-ups to Endowment and Trust Funds	6.00	3.60
Add:
NET INVESTMENT RETURNS CONTRIBUTION	9.90	14.70	4.81	48.6
OVERALL BUDGET SURPLUS / DEFICIT5	(4.88)	3.45

1 Please refer to the Analysis of Revenue and Expenditure for the breakdown of total expenditure by sectors.
2 Surplus / Deficit before Special Transfers and Net Investment Returns Contribution.
3 Special Transfers include Top-ups to Endowment and Trust Funds.
4 Surplus / Deficit before Top-ups to Endowment and Trust Funds, and Net Investment Returns Contribution.
5 As stated in the FY2016 Budget Statement, the estimated FY2016 Overall Budget Surplus is $3.4 billion when rounded to 1 decimal place. The difference is due to rounding.

[From another article: 

"In 2014, the Government assessed for private homes $920.1 million in ABSD, $619.7 million in BSD and $30.5 million in Seller's Stamp Duty. A further $4.05 billion in property tax was collected in the 2014/2015 financial year."

So the $2.73b for stamp duty in the 2015 table would include the ABSD ($920m), the BSD ($620m) and Seller's Stamp Duty ($30m; total of all three: less than $1.6b). Property tax probably comes under "Assets Taxes" with a total of $4.39b, of which $4.05b is from property taxes.]

The main contributors to the higher revenue were $1.45 billion more from statutory boards, $1 billion more from personal income taxes and $1.14 billion from motor vehicle taxes (here's where your COE or Certificate of Entitlement money went).

[No. That's MV Tax. COE is "Vehicle Quota Premium" and it's $5.65b.]

With Temasek's inclusion, the projected Net Investment Returns (NIR) for fiscal 2016 will almost double (up 48.6 per cent) to $14.7 billion from last year's $9.9 billion.

(Right. A 50% increase is "almost double". )

The NIR framework was implemented in 2009 to allow the government to spend up to 50 per cent of the expected long-term real returns on its net assets managed by the Monetary Authority of Singapore (MAS) and GIC - and now, Temasek.

Temasek's inclusion, said Mr Heng, will be a source of revenue for the long term. But he cautioned that some of the increase in operating revenue for 2016 came from "one-off factors which we do not expect to be sustained" - a nod to COE prices being expected to decline in the next one to two years as the economy slows.

Mr Heng went on to warn that "the longer term picture will grow more challenging as we expect expenditure needs to grow faster than revenues".

Of comfort though is that total spending on Budget 2016 is 17.9 per cent of Singapore's gross domestic product or GDP, still low by developed country standards. OECD data shows Singapore's peers tend to spend around 40 per cent to 50 per cent of their GDP.

[Malaysia's 2015 estimate is that they spend about 21.7% of their GDP, and have had budget deficits since 1998. ]