Road to Recovery: Singapore's Journey through the Global Crisis

APPENDIX IV: Key Budget FY2010 Initiatives

APPENDIX IV Key Budget FY2010 Initiatives Presented to Parliament by Finance Minister Tharman Shanmugaratnam on 22 February, 2010 Benefits for Businesses Raising Productivity: Skills, Innovation and Economic Restructuring The Government will commit SG$1.1 billion a year over the next five years in the form of tax benefits, grants and training subsidies to support the national effort to raise productivity. Details of the relevant Budget measures are given below. (A) Boosting Skills and Enterprise Productivity through National Effort (A1) National Productivity and Continuing Education Council (New) The Government will establish a high-level National Productivity and Continuing Education Council. The Council will be chaired by DPM Teo Chee Hean and include 10฀RtR.indd฀฀฀190 7/12/10฀฀฀5:29:59฀PM Appendix IV 191 members from the Government, business community and the labour movement. It will: • Galvanise the major national effort to boost skills and enterprise productivity; • Develop a comprehensive system for continuing education and training (CET); and • Oversee the work of the different government agencies and promote close collaboration among the business sector, workers and unions, and the public sector. More details on the composition of the Council and how it will approach its work will be announced later by DPM Teo. (B) Investing in People (B1) Expansion of the Continuing Education and Training (CET) System (Enhanced) The Government will spend SG$2.5 billion over the next five years on CET. The Government will build up an outstanding CET system for adults, to complement a first-rate education system for our young. This is our response to the next phase of gains in productivity, which will require us to develop competence in more complex tasks, mastery of skills and depth of expertise in every trade and profession. 10฀RtR.indd฀฀฀191 7/12/10฀฀฀5:29:59฀PM 192 Road to Recovery (B2) Introduction of Workfare Training Scheme (WTS) (New) The Government will introduce a three-year Workfare Training Scheme (WTS) to complement the Workfare Income Supplement (WIS) scheme. The WTS will: • Subsidise 90 per cent to 95 per cent of absentee payroll and course fee outlay for employers, when they send their low-wage workers for training; • Provide cash grants, capped at SG$400 per year, when WIS recipients complete their training; • Introduce a structured training programme for those with very low skills, including those who are unemployed. (B3) Enhancement of Workfare Income Supplement (Enhanced) The Government will enhance the Workfare Income Supplement (WIS) Scheme as follows: • Higher payouts. Maximum payouts for the WIS will be increased by between SG$150 and SG$400, with more going to older workers to encourage them to remain in the workforce; and • Extension to more workers. The Government will extend WIS to workers earning up to SG$1,700 per month — up from the current limit of SG$1,500 per month. Further details of the enhancements to Workfare (WIS and WTS) will be announced during the Ministry of Manpowerʼs Committee of Supply. 10฀RtR.indd฀฀฀192 7/12/10฀฀฀5:29:59฀PM Appendix IV 193 (C) Supporting Enterprise Investments in Innovation and Productivity The Government will provide tax incentives for businesses to invest in upgrading their operations and creating new value. The Government will also extend substantial grants to specific industries, clusters and enterprises. (C1) Productivity and Innovation Credit (New) Currently, only research and development (R&D) qualifies for additional tax deductions, of up to 150 per cent of expenditures. The Government will introduce the Productivity and Innovation Credit as a major enhancement, to spur a much broader range of innovative activities and with more generous tax benefits. The Credit will cover six activities along the innovation value chain (namely research and development done in Singapore; acquisition of intellectual property (IP); registration of IP; investments in design done in Singapore; spending on equipment and software to automate processes; and workersʼ training). All businesses will be eligible for the Credit, based on the expenditure they incur in any of the activities. They can deduct 250 per cent of their eligible expenditures on each of these activities from their taxable income, with a cap of SG$300,000 expenditure per activity. This will be effective from Year of Assessment 2011 to Year of Assessment 2015. Details of the Productivity and Innovation Credit are as follows: 10฀RtR.indd฀฀฀193 7/12/10฀฀฀5:29:59฀PM 194 Road to Recovery Enhanced Tax Deduction...