How would Budget 2021 affect a young millennial in Singapore?
COVID-19 came like a curveball that no one asked for, and many calamities sped almost like the crumbling twin towers in 911. We wouldn’t have expected to receive a colossal blow which constricted our globalization dream and certainly forced us into protectionism.
In 2020 alone, Singapore announced 4 budgets to minimize huge financial impacts due to heavy hit industries such as travel and tourism. And they have catered most policies to slowing unemployment rates through various job-support schemes and incentives for employers.
On 16 February 2021, Minister of Finance Heng Swee Keat broke down the budget into various components through a more “targeted” approach, allocating more funds to relieve affected sectors. That budget could determine how the next few years would be for Singapore, particularly when hopes of vaccinating the world appeared uncertain.
As a millennial who is entering the workforce, or perhaps as someone who is keen on starting a family in Singapore, it is time for me to start asking tougher questions. While many may find it difficult to embrace recent changes, it is always wise to think about how we can work with them to help us propel further in life.
Essentially, 2021 could be a defining year to rethink our priorities and envision how our future would pan out with more restrictions and changes.
After listening to the whole budget speech, I was particularly curious about implementing various policies that could affect our consumer spending and behavior.
Imposing taxes on low value imported goods from 2023
This could be a big game-changer for the eCommerce industry, especially how many gurus have prided themselves on flipping cheap goods for huge profit margins. When GST is extended to these goods, many worried about getting pinched on their daily needs because buying locally may not be affordable.
Particularly for new parents, stocking up on milk powders might be cheaper if they imported it from Malaysia. And the present situation made that option impossible.
As we think of more options to get our needs at a lower cost, getting them locally could be our next alternative.
Petrol duties increased by 10–15 cents per liter
By not increasing GST from 7% to 9%, it is absolutely logical for the government to claim taxes through this avenue. While many opted for private transport to avoid crowds, ridership plummeted considerably during the lockdown and failed to recover as many remained conscious.
Yet it is worrying because these incomes relied heavily on driving and it could reduce more drivers because of higher costs. Moreover, this could lead to more drivers earning less income besides suffering from a significant drop in foreign travelers.
Furthermore, this could also affect every part of the entire supply chain by passing on more costs to logistics, which would end up charging more to its consumers. The same product might cost 10–15% more than before, and it would discourage more users from shopping online.
However, it would not change the current consumption habit but could deter more online businesses by incurring more upfront costs. Notably, this policy encourages more residents to drive electric vehicles (EV), which I thought could backfire on other sectors that relied heavily on logistics.
While many are contented with the budget targeting more on affected sectors, there are some considerations I think Singaporeans can take into account.
- How would this budget affect me for the next three to five years?
- In terms of economic recovery, how well-positioned is Singapore going to recover to pre-COVID-19?
- Is the government spending sufficiently on areas that would effectively align with the residents’ interests?
- Are all these policies future-proof? And if Singapore could remain attractive to entice more talents?
- In order to bring about change, is the Government able to justify how these policies can encourage more citizens to do so?
While everyone sounds optimistic about the economic recovery, I believe Singapore can tide through the pandemic with its state capability and high public trust. However, I will remain vigilant about whether these fiscal policies can effectively curb the change in consumer behavior without raising taxes across the board.
As a young millennial living in Singapore, not only could these policies affect my family planning, but the current rising cost of living could also be amplified.
About The Author:
Vince Law is a Final Year Accountancy and Finance undergraduate at Singapore Management University. He has worked at one of the Big 4 Accounting firms and having completed a consulting internship with an SME in Singapore. He writes on topics related to personal development and current affairs through his lens.
