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Government set to post S$6 billion in budget surplus
By Faris – January 13th, 2011
http://sg.yfittopostblog.com/2011/01/13/government-set-to-post-s6-billion-in-budget-surplus/
A whopping S$6 billion in budget surplus; that is the amount the government is set to gain after a buoyant economy boosted tax collections last year.
This comes after private economists say that the country could post record revenues hitting as high as S$50 billion, an increase from S$38 billion in 2009. They attribute this to factors such as solid wage growth, strong corporate profits and a sizzling property market.
A surplus is the left over amount from state revenues after taking into account all government spending. A deficit is where there is a shortfall.
Speaking to The Straits Times on Tuesday, Bank of America Merrill Lynch economist Chua Hak Bin and DBS economist Irvin Seah expect the budget surplus to hit a bumper $6 billion.
This is a dramatic reversal from an official government estimate of a S$3 billion deficit, made in February last year. “The booming economy bumped up corporate and personal income taxes, which saw much higher collections compared with the government’s estimates,” said Dr Chua.
Gaming taxes and duties from the integrated resorts are expected to add S$1.1 billion to government coffers, he added. Mr Seah weighed in that the strong property market has also contributed to higher revenues.
They also said that this year, the government could have a considerable war chest for helping people. Especially in assisting the lower-income earners cope with the effects of rising consumer prices.
Other economists, such as OCBC’s Selena Ling and Citigroup’s Kit Wei Zheng, expect government revenues to significantly beat official estimates of S$40.7 billion.
“This pattern of budget conservatism versus actual fiscal outperformance has been a recurrent theme in the past five years,” noted Mr Kit.
If the economy does post an estimated S$6 billion surplus, it would be the second-highest in the last decade and is just short of the S$7.6 billion surplus recorded in 2007.
On the other hand, Dr Chua anticipates that the next general election will be called soon after the Budget – due some time next month – making the next announcement a notable one.
This is because, under the constitution, the government is required to balance the budget books for its entire term, which began in 2007. Savings and surpluses over the term of government will be locked up as past reserves at term-end.
In contrast, any deficits incurred overall will be considered a drawdown on past reserves which can be done only with the president’s consent.
The net position over the past four years could be an overall surplus of S$9 billion to S$12 billion, depending on the final fiscal figures released, said Mr Kit.
“The government can draw down on this term’s past surpluses to announce a generous Budget this time, if it wants to,” he said.
But what is certain is that the money will go towards tackling the income gap and the higher inflation that is expected this year.
Dr Chua also expects that in the Budget, the government will hand out one-off goodies, such as Central Provident Fund (CPF) top-ups and utility and property tax rebates.
But he doubts that the government will give permanent cuts to income and corporate taxes saying this will impact the fiscal positions in the years ahead.
However, economists such as Mr Seah and Ms Ling said the government may want to return the S$4.9 billion it drew down from past reserves in 2009 to pay for the Jobs Credit Scheme.
Due to the effects of the global financial crisis, the government scheme paid for a portion of a local worker’s salary in order to save jobs.
“They don’t have to as it is not a loan. But even if they do, there will be plenty of money left,” said Ms Ling.
==============================================
Remember, that's the amount of tax collected from you.
By Faris – January 13th, 2011
http://sg.yfittopostblog.com/2011/01/13/government-set-to-post-s6-billion-in-budget-surplus/
A whopping S$6 billion in budget surplus; that is the amount the government is set to gain after a buoyant economy boosted tax collections last year.
This comes after private economists say that the country could post record revenues hitting as high as S$50 billion, an increase from S$38 billion in 2009. They attribute this to factors such as solid wage growth, strong corporate profits and a sizzling property market.
A surplus is the left over amount from state revenues after taking into account all government spending. A deficit is where there is a shortfall.
Speaking to The Straits Times on Tuesday, Bank of America Merrill Lynch economist Chua Hak Bin and DBS economist Irvin Seah expect the budget surplus to hit a bumper $6 billion.
This is a dramatic reversal from an official government estimate of a S$3 billion deficit, made in February last year. “The booming economy bumped up corporate and personal income taxes, which saw much higher collections compared with the government’s estimates,” said Dr Chua.
Gaming taxes and duties from the integrated resorts are expected to add S$1.1 billion to government coffers, he added. Mr Seah weighed in that the strong property market has also contributed to higher revenues.
They also said that this year, the government could have a considerable war chest for helping people. Especially in assisting the lower-income earners cope with the effects of rising consumer prices.
Other economists, such as OCBC’s Selena Ling and Citigroup’s Kit Wei Zheng, expect government revenues to significantly beat official estimates of S$40.7 billion.
“This pattern of budget conservatism versus actual fiscal outperformance has been a recurrent theme in the past five years,” noted Mr Kit.
If the economy does post an estimated S$6 billion surplus, it would be the second-highest in the last decade and is just short of the S$7.6 billion surplus recorded in 2007.
On the other hand, Dr Chua anticipates that the next general election will be called soon after the Budget – due some time next month – making the next announcement a notable one.
This is because, under the constitution, the government is required to balance the budget books for its entire term, which began in 2007. Savings and surpluses over the term of government will be locked up as past reserves at term-end.
In contrast, any deficits incurred overall will be considered a drawdown on past reserves which can be done only with the president’s consent.
The net position over the past four years could be an overall surplus of S$9 billion to S$12 billion, depending on the final fiscal figures released, said Mr Kit.
“The government can draw down on this term’s past surpluses to announce a generous Budget this time, if it wants to,” he said.
But what is certain is that the money will go towards tackling the income gap and the higher inflation that is expected this year.
Dr Chua also expects that in the Budget, the government will hand out one-off goodies, such as Central Provident Fund (CPF) top-ups and utility and property tax rebates.
But he doubts that the government will give permanent cuts to income and corporate taxes saying this will impact the fiscal positions in the years ahead.
However, economists such as Mr Seah and Ms Ling said the government may want to return the S$4.9 billion it drew down from past reserves in 2009 to pay for the Jobs Credit Scheme.
Due to the effects of the global financial crisis, the government scheme paid for a portion of a local worker’s salary in order to save jobs.
“They don’t have to as it is not a loan. But even if they do, there will be plenty of money left,” said Ms Ling.
==============================================
Remember, that's the amount of tax collected from you.
