Singapore Budget to provide targeted support, avoid hurting attractiveness to HNWIs: Deloitte

IN the continued shift from fire-fighting to focusing more on recovery, the Budget is likely to feature very targeted support, with care taken not to hurt existing advantages such as Singapore's attractiveness to high net worth individuals (HNWIs), Deloitte Singapore representatives told the media on Wednesday.

While there have been widespread calls to extend the Jobs Support Scheme (JSS) and the Jobs Growth Incentive (JGI), for instance, these extensions are likely to be narrow. Deloitte does not expect the JSS to be extended for sectors other than aviation, hospitality and tourism.

As for the JGI, the support could also be scaled down, though it may still be too early to discriminate by sector, said Daniel Ho, tax partner and tax leader for government and public services sector.

The impact of the JGI, which subsidises wages for new local hires, may change as the labour market improves, said transportation, hospitality and services sector leader James Walton. Some jobseekers who settled for less-than-ideal jobs amid the crisis might start to look for better alternatives as the recovery proceeds.

On the consumption front, efforts to encourage domestic spending may take the form of credits or rebates rather than cash handouts, said Mr Walton. "Now that the situation is not so desperate, support will be more subtle or nuanced."

With the main focus of the Budget likely to be continued transformation and recovery, tax changes are not expected to feature greatly.

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As for the question of how to boost government revenue, Deloitte expects efforts to reduce tax leakages. There might also be room to raise the carbon tax rate, currently set at S$5 per tonne of greenhouse gas emissions from 2019 to 2023.

But wealth taxes are "the one thing that they will not bring back", says regional managing partner for tax and legal Low Hwee Chua. To do so would be counterproductive for the recovery and for revenue, hurting Singapore's current advantage in attracting HNWIs.

Arrivals of HNWIs have risen significantly in recent years, from countries such as China and even Japan, said Mr Walton.

Recently, both individuals and firms based in Hong Kong have shown greater interest in coming to Singapore, said tax partner and leader of global employer services Sabrina Sia. This could give Singapore more leeway to consider tweaking the personal income tax framework, which would not be as damaging a move.

Nor is the Net Investment Returns Contribution framework likely to be tweaked at this point, given long-running caution by the government, said the Deloitte representatives.