TAX CHANGES FOR INDIVIDUALS

Income Tax Rebate

Because of the good performance of the economy in 1994, I propose to give an across-the-board one-off rebate of 10% on individual income tax for the Year of Assessment 1995. This is equivalent to a 3 percentage proportional cut in tax rates. The revenue loss to the Government is estimated to be $234 million.

Rebates on HDB Service and Conservancy and Rental Charges

With GST-related personal income tax changes which took effect from Year of Assessment 1994, 71% of individuals no longer pay income tax. As they have also contributed to the growth of the economy, Government will pay, on behalf of citizen householders staying in rented and owner-occupied HDB flats, the following charges:

a) One-Room Flats

Payment of two months' net rent and three months' net S&C charges, after deduction of the GST offset rebates. The rental payments will be made on 1st April and 1st December, and the S&C payments on 1st April, 1st August and 1st December this year.

b) Two-Room Flats

Payment of one month's net rent and three months' net S&C charges, after deduction of the GST offset rebates. The rental payment will be made on 1st April and the S&C payments on 1st April, 1st August and 1st December this year.

c) Three-Room Flats

Payment of two months' net S&C charges after deduction of the GST offset rebate. The payments will take effect on 1st April and 1st December this year.

d) Four-Room Flats

Payment of one month's gross S&C charges, to be made on 1st April this year.

e) Five-Room Flats

Payment of one month's gross S&C charges, to be made on 1st April this year.

The estimated additional cost of these rental and S&C rebates to the Government is $30 million. CPF Top-Up Scheme

The exceptional performance of the economy last year has allowed the Government to accumulate a substantial budget surplus. Although most of the surplus will be put into reserves as a bulwark for the future, a portion will be returned to Singapore citizens who have contributed to the growth of the economy. Government will therefore pay a sum of $200 into the ordinary CPF account of every Singapore citizen aged 21 and above. The payment will be made on 1st October 1995. The cost of this payment is estimated at $360 million.

Tax Deduction for CPF Contributions by Self-Employed

Self-employed persons who contribute to the CPF are allowed to deduct their contributions, inclusive of compulsory Medisave contributions, from their assessable income. The present limit for such deductions is 18.5%, subject to a maximum of $13,320.

On 1st July 1994, the employer_s CPF contribution rate was increased to 20%. In line with this, the limit for the tax deduction will be raised to 20% of the assessable income from self-employment, subject to a maximum of $14,400. This will take effect from the Year of Assessment 1996.