Nevermind the one-off, SGD 300 “hong pao” (which for the record, we’re thankful for) – Budget 2018 has a more important, long term impact on young Singaporeans. There were quite a few things that were announced, but we’ve decided to highlight the five most important things that will probably directly impact your life if you’re a millennial in Singapore.
From singles buying resale flats to entry level workers, here are the main issues to take note of:
Get ready to pay more for your music, movies, and games
From 1st January 2020, there will be a Goods and Services Tax (GST) levied on imported services*.
The good news is, this won’t affect products, such as books, shoes, drones, etc. The current GST rules are unchanged for these (you only need to pay GST if the value of your imported products exceeds SGD 400).
The bad news is, the e-tax will affect digital streaming and entertainment services. The ones that are probably affected include Netflix, Spotify, and Steam.
A GST rate of seven per cent (or nine per cent between 2021 and 2025 – see below), may not present that big a price change for services like Netflix and Spotify (approximately an increase of just over a dollar), but it’s still annoying to have to pay more. A possible way to offset this price increase would be to make your online purchases via a credit card with a good cashback rate.
Another major worry would be the impact on high value online courses / workshops. However, it gets more painful when purchasing services such as online videography or programming courses. For example, if you buy an online, SGD 2,000 digital illustration course, a seven per cent GST would raise the price by a whopping SGD 140 (or SGD 180 when the nine per cent GST kicks in).
If there are any such courses you’re interested in, then you’d better hustle.
Sign up before January 2020.
*If the service provider has no establishment in Singapore, has an annual turnover of at least SGD 1 million worldwide, and makes at least SGD 100,000 from the sale of digital services in Singapore.
GST will be raised to nine per cent
Sometime between 2021 and 2025, the GST will be raised to nine per cent. This means a general increase in the cost of goods, and it’s only likely to rise further over time.
As with the first point, the impact is most significant with big ticket items, such as electronic gadgets. A SGD 1,500 laptop currently comes with a GST of SGD 105, but this will be increased to SGD 135 once GST is at nine per cent. A SGD 900 DSLR camera, which currently has a GST of SGD 63, will have a tax of SGD 81 at the new rate. You get the idea.
Buying a resale flat as a single? Your own pad just got more affordable
If you’re single and are looking to get your own place, Budget 2018 was good news.
The Proximity Housing Grant (PHG) scheme has been expanded, and now includes singles buying resale flats. If you buy a resale unit near* your parents, you can get a PHG pay-out of SGD 10,000.
Alternatively, if you’re okay to live with your parents in your own resale flat, the PHG becomes SGD 15,000 (increased from SGD 10,000 previously). This raises your chances of being able to have your own place, while still living in the same, familiar neighbourhood.
For couples looking to get a resale flat and live with their parents, they can also get a PHG pay-out of SGD 30,000 (increased from SGD 20,000 previously).
*Near = within four kilometres
Bad news for smokers
The tobacco excuse duty has now been raised to 10 per cent. In practical terms, this means that a cigarette stick (any sort of cigarette, containing tobacco or tobacco substitutes) has an excise duty of 42.7 cents per gram, or part thereof. This is up from the old rate of 38.8 cents per gram.
Overall, the price of a single pack of cigarettes has risen by around SGD 1-2. Assuming a two-pack a day habit, a smoking habit will now cost you an additional SGD 730 per annum.
Entry level wage? It may not stay that way for long
We’ve all got to start somewhere, but you’re also getting help from the government. And for Budget 2018, the Wage Credit Scheme (WCS) is being extended by another three years.
The WCS was introduced way back in Budget 2013, and boosts your chances of a pay raise. Back then, the government would fund 40 per cent of an employee’s pay raise, up to a salary of SGD 4,000 per month.
Sadly, the funding is not as high this year, compared to previous years. The government is funding 20 per cent of pay raises in 2018, 15 per cent in 2019, and 10 per cent in 2020.
But it’s still good news, as your employer has an incentive to boost your income. Coupled with your ability to do a good job, this could be just what it takes to net yourself a juicy pay raise. One that will more than compensate for any GST hikes!