Economists are predicting a higher budget surplus than was originally expected for the past financial year, which ends on March 31. They say that this is because of fewer expenses for development, as well as bigger stamp duties and tax receipts.
The country has seen an economy that has grown stronger, with the result that government coffers have grown as well. This has led economic experts to predict a huge surplus from 2017, even before Heng Swee Keat, Finance Minister, announces the Budget today, February 19. They have drawn up their own estimation on the government’s income and expenditures.
Francis Tan, an economist for the United Overseas Bank, has predicted that the surplus for fiscal year 2017 is $3.1 billion. The original government surplus prediction was estimated to be at $1.91 billion. The UOB thinks that the surplus may be 2 billion dollars higher than expected, due to greater corporate income tax collection as well as stamp duties.
Mr. Tan says that corporate income taxes may generate $14.8 billion, which is more than $1 billion higher than the official projected amount of $13.6 million. Mr. Tan’s prediction would make corporate income tax the highest contributor to government revenue, a place it has helped before, edging higher than the contribution from net investment returns (NIR), which is at $14.11 billion.
Two years ago, fiscal year 2016, was the first time that contributions from NIR became the largest contributor to government revenue, since that year was when Temasek became part of the framework.
Stamp duty collection is also higher than expected, because of the greater number of property transactions than was originally estimated. The UOB predicts that $5 billion will be collected from stamp duties, which is considerably higher than the official amount predicted to be at $2.7 billion.
There are budgetary items, however, that the UOB estimates will be lower than what the government expected. For collections for personal income tax, the UOB expects the figure to be at $10.70 billion, lower than the government estimate of $10.74 billion. And for goods and services tax (GST) the UOB’s prediction is $11.2 billion, a little less than the $11.3 billion estimated by the government.
Irvin Seah, an economist for the DBS, is predicting that the surplus will reach $5 million, which is 1.2 percent of the gross domestic product, since operating expenses that are lower than what was originally projected. 2017 saw a low inflation rate of 0.6 percent, which led to smaller development expenses.
Meanwhile, Selena Ling, an economist for OCBC, is saying that total taxes collected may exceed the predicted amount by five percent, which puts the surplus at $5.41 billion. Ms Ling said, “The healthy Singapore economy has lifted many boats, including benefiting tax collections.”
The outlook for FY 2018 is somewhat different, however, although economists still believe that the country’s financial discipline will go on. Mr. Tan from the UOB thinks that the surplus will decrease to $2.1 billion new year, if total expenses overtake operating revenues.
Meanwhile, the OCBC is predicting three different possibilities for 2018, which are dependent on whether or not GST rates rise next year. If GST rates do not rise, OCBC predicts a $3.1 billion surplus. If there is a 1 percentage point rise in GST, OCBC predicts a $4.6 billion surplus, and with a 2 percentage point rise, $4.8 billion. Mr. Seah from the DBS has an even higher predicted rate for the surplus, at $6.5 billion, while increases in expenditures and collections will rise minimally.