The Singapore government has a stronger than expected budget surplus for last year at $6.4b. This was the highest budget surplus since 1994. The government anticipated a deficit of $0.7 billion when they presented the budget in February 2007.
This was the result of a strong GDP real growth of 2007 at 7.7%. The corporate and personal income taxes were $1 billion higher than expected. GST revenue also exceeded projection by $1.2 billion because of higher consumption. The largest boost to the surplus came from the buoyant property market. Stamp duties rose to $3.8 billion, $2.3 billion higher than expected. Other property-related revenues were around $1.1 billion above projections. (Source: Finance Minister’s speech in parliament, 15 February 2008)
This budget surplus allowed the government to give out $1.8 billion for this year. The significant amounts of putting money in the pockets of individuals include:
– $865 million in Growth Dividends
– $380 million in 20% personal tax rebates cap at $2,000
– $300 million to top up students’ Post Secondary Education Account
– $220 million to top Medisave accounts for those age 51 and above
On most accounts, 2007 was a good year for revenue collections by the government because of strong economic growth environment in 2007 especially during the first 3 quarters of 2007. The fourth quarter however saw a slowdown. On a seasonally-adjusted, quarter-on-quarter basis, the economy shrank 4.8% in the fourth quarter.
2007 started with a bang but sentiment for the economy turned cautious by the end of 2007. The property frenzy has been brought down to earth. The collective sales of properties have since slowed significantly. We hear less of eye-popping property transaction prices. The stock markets had lost most of 2007 gains. Inflation was 4.4% in December 2007 (y-o-y) and is expected to get worse in the first half of 2008.
Those who speculated big on the property market and stock market are probably hurt by the change of fortune. The moral of story is still to stick to the age-old wisdom – “spend within your means and save for the rainy days”. Greed can get a person into trouble.
Written on 2/17/2008 10:52 AM
Copyright © 2008, the author known as LKT in Singapore.
The material presented is intended to be general and written in layman’s language as much as it is possible. The author shall not be liable for any direct or consequential loss arising from any use of material written. Please seek professional advice from your financial advisor or financial institutions on material written covering financial matters.