I read the budget speech. Here’s what I got out of it. I decided not to read the last chapter with minutiae about new policies, but otherwise I got pretty much everything. Paragraph numbers in parentheses where pertinent, my comments in footnotes.

  1. While the Government had provided for a budget deficit in 2007, clement economic conditions (pp. 1.1-2, 1.5) resulted in an extraordinary surplus (p. 1.4), buoyed primarily by the resurgent housing bubble1 market (pp. 1.7-8).However, external forces beyond the control of the Singapore government have influenced the Singaporean economy to a significant extent (p. 1.3), and will continue to influence the Singaporean economy in the foreseeable future (p. 1.10). Of particular concern is the impending recession in the US economy (pp. 1.9,11)
  2. The amount given out in one-time rebates matched the total increase in GST revenue in 2007 (p. 1.6)2; however, the unexpectedly high inflation rate (p. 2.9)3 far surpassed any comfort provided by the rebates (p. 2.1), which is fueled primarily by rising oil prices (p. 2.2) and a global food shortage (pp. 2.3-4,10)4, and the property market boom (p. 2.8). The rate of inflation accelerated dramatically at the end of 2007 (p. 2.5). The government denies that the GST rate hike contributed in any way to this inflation (p. 2.6)5, or that most Singaporeans will be affected “materially” by rising housing prices (pp. 2.8,11).6
  3. The government is extremely worried about inflation spiraling out of control (pp. 2.11-12), and plans to take action to keep it in check (pp. 2.12,13) by letting the Singapore dollar continue its appreciation (p. 2.14)7, encouraging new imports of food (pp. 2.16-7), encouraging home ownership (p. 2.18), providing direct assistance and redistributing wealth (pp. 2.19-25,5.30-47), and further economic development (pp. 2.27-9). However, it admits that monetary policy can only do so much to keep inflation under control (p. 2.15), and more extreme measures like price controls aren’t even worth considering (p. 2.19).8
  4. The government is concerned with a shortage of office spaces (p. 4.51), and plans to relocate some facilities (p. 4.53) and release new offices (p. 4.54) while new construction continues (p. 4.52). At the same time, it is planning to defer spending on “less urgent” projects (p. 4.55).9
  5. However, the government plans to spend much more on what amounts to supply-side economics. It plans to spend more on:
  1. new infrastructure (p. 4.7),
  2. (re)developing HDB estates (p. 4.8),
  3. preschool education (p. 4.12)
  4. subsidies for higher education at the polytechnic (pp 4.23-26) and university (pp. 4.15,17-22) and “continuing education and training” (pp. 4.27-31, Annex B-1) and
  5. R&D and its commercial spinoffs (pp. 4.34-49, Annex B-2)
  1. The government plans more handouts (p. 2.26) when the economy improves, and tax rebates (p. 4.80,1) in 2008.
  2. The government also plans to provide yet more tax incentives (Annex B-3), especially for startups (p. 4.61), renovations (p. 4.62), and high finance (p. 4.66); in particular Islamic finance (p. 4.63), wealth management (p. 4.64), and insurance companies (p. 4.65), maritime financing (p. 4.67). Also, it’ll eliminate double taxation for corporations (p. 4.68) and extend the tax deferment for hiring and moving expenses for foreign talents (p. 4.69)
  3. The government plans to reform parts of the existing tax code. In particular, estate tax is now eliminated (pp. 4.71-6,8, Annex B-4), partially to encourage wealthy foreigners to park their wealth in Singapore (p. 4.76). Road tax will be reduced as ERP continues to proliferate (p. 4.83). Also, there are some (largely) revenue-neutral miscellaneous adjustments (p. 4.82,4,5, Annex B-5).
  4. The government plans to encourage voluntary CPF contributions (p. 5.8-10) and contributions to other schemes (p. 5.11-2,28) including MediShield (p. 5.25-7), and also introduce bonuses and automatic enrollment in something called the LIFE scheme (p. 5.14-24, Annex C)

Random tidbits: purple gold was invented in Singapore (p. 4.38), and there is exactly one privately-owned diesel car in Singapore (p. 4.84)

Footnotes
  1. Initially I wrote ‘bubble’ here, but upon further consideration, I think a good chunk of it is pent up demand that was depressed since 1997 - the baht-induced crisis, 9/11 and the Iraqistan mess. However, I have no doubt some of Bush’s legacy is responsible for massive capital flight from US currencies; some of it had to end up in Singapore.↩
  2. This argument, of course, totally ignores the one-time nature of the one-time rebate. Does the government intend to hand out compensatory cashouts in perpetuity? Why not just lower taxes and be done with it?↩
  3. Inflation is a recurring theme in the budget speech, and with good reason. It certainly hit me in full force when I last visited.↩
  4. One can thank corn-based ethanol initiatives for the food shortage, and the GOP/farmstead state legislators for passing such incredibly short-sighted policy bills into law.↩
  5. Hasn’t anyone in the finance ministry taken basic macroeconomics, and realized that regressive taxation is not a good thing economically or socially? Does anyone there realize that there is a not insignificant lag time before the effect of higher taxation trickles down the supply chain and promotes the tendency for prices to snowball?↩
  6. Someone should remind them about “en-bloc victims”, new homeowners and housing speculators.↩
  7. Letting the Singapore dollar appreciate opens yet another can of worms - a stronger Singapore dollar effectively makes Singapore more expensive to foreign companies, which still constitute a large chunk of the economy. The government may have to introduce even more taxes to compensate for this, which surely comes at the expense and continued exploitation of the domestic tax base.↩
  8. Prominently absent is any mention of further tax reductions.↩
  9. No mention of what these “less urgent” projects are.↩