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Singapore Budget 2015: Govt to phase out Transition Support Package
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THE Transition Support Package (TSP), launched in 2013, will be phased out gradually, said Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam on Monday.
The TSP comprises the Wage Credit Scheme (WCS), Corporate Income Tax (CIT) rebate, and the Productivity and Innovation Credit (PIC) bonus. In total, the TSP is estimated to disburse S$7.5 billion over three years, higher than the original estimate of S$5.3 billion, said Mr Tharman.
The WCS will be extended for 2016 and 2017 to give employers more time to adjust to the tight labour market. This extension will cost about S$1.8 billion in total.
Over the next two years, the government will co-fund 20 per cent of wage increases given to Singaporean workers earning a gross monthly wage of S$4,000 and below. This co-funding will apply to wage increases given in 2016 and 2017.
Mr Tharman added that if wage increases given in 2015 were sustained in 2016 and 2017, employers would continue to receive co-funding at the new rate of 20 per cent.
The CIT rebate, meanwhile, will be extended for Years of Assessment (YA) 2016 and 2017 at the same rate of 30 per cent of tax payable, but up to a lower cap of S$20,000 per YA. This extension is expected to cost about S$800 million in total.
Mr Tharman also said that the PIC bonus, which offers substantial enhanced tax deductions or cash payouts on qualifying activities, will expire in YA 2015.
"The PIC bonus was intended as a transitional measure and has been successful in spreading the culture of productivity among SMEs (small and medium-sized enterprises)," he said.