EY's wish list for Budget 2021 includes boosting funding for training, hiring

Singapore

FUNDING for training, hiring and other staff issues could be boosted with some policy tweaks, according to Budget 2021 proposals from one professional services firm.

The Covid-19 economic downturn, business productivity and innovation, workforce transformation, and taxation were tipped as priorities for the national spending plan, in recommendations released by Ernst & Young Solutions (EY) on Monday.

In a statement, Soh Pui Ming, EY's Singapore head of tax, said: "Now that the worst of the pandemic looks to be behind us, it's time to focus on supporting businesses to strengthen and transform for the future, while ensuring that the most impacted individuals and households are given help to rebuild their lives and livelihoods."

Top-ups of training credits under the SkillsFuture campaign could be made to both individuals and companies, EY noted in its suggestions.

The proposed measures would involve expanding Budget 2020's one-off credit of S$10,000 to cover employers' capability development and workforce transformation expenses.

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Samir Bedi, EY Asean workforce advisory leader, has also called for a one-off SkillsFuture Credit top-up for lower-income citizens to attend pre-qualified digital courses, on top of the one-off top-up of S$500 for all citizens aged 25 years and over in 2020.

Separately, Mr Bedi also called on the government to offer higher levels of support for job redesign in the industries that have been harder hit by the Covid-19 pandemic.

While the Productivity Solutions Grant now provides up to S$30,000 for each company to redesign work processes and roles, he said this cap could be raised in sectors such as aviation, tourism, and hospitality.

Building on last year's job support, EY also urged time extensions for schemes where the government pays for a share of new hires' salaries, with higher support for older staff.

Partners asked the government to continue covering mid-career workers - those aged 40 years and above - beyond the original expiry in 2021.

"The pandemic has transformed the way people work and behave, and how companies adapt to these changes will be critical," EY said. "It is crucial to drive workforce resilience when reinforcing enterprise resilience."

For the businesses that are unable to hang on to their employees, though, EY also proposed doubling the tax deduction on outplacement support expenses to 200 per cent.

Such a move would "encourage and recognise employers who continue to assist terminated employees to transit to a new job through outplacement support", said Teh Swee Thiam, tax services partner at EY.

Meanwhile, the firm suggested preferential tax rates for financial technology innovation in areas such as mobile payments, biometrics authentication and blockchain.

Also, tax losses from research and development activities in growth areas such as digital and fintech could be carried over to offset taxable income in future financial years, EY suggested.

This would mark an expansion of the tax policy that now allows losses to be transferred within a business group for the current year.

Other measures on the EY wish list include more flexible tax deductions for interest on working capital borrowings, doubling corporate income tax rebate cap to S$30,000 in 2021, as well as tax breaks on employees' pandemic-related allowances or benefits.