The Singapore Budget 2026 announcements dominated headlines with tales of AI transformation and family support packages. But buried within the Ministry of Finance’s analysis documents lies a more revealing story about where government revenue actually flows from, and it’s not quite the narrative of shared prosperity you might expect.
Corporate Income Tax (CIT) collections for the revised Financial Year 2025 came in at $35.24 billion; a staggering $2.57 billion (7.9%) higher than the original estimate of $32.67 billion. The official explanation: “Stronger-than-expected economic growth in 2024.”
Whilst Singapore’s economy did experience growth, this windfall suggests corporate profitability significantly outpaced official forecasts. For FY2026, the Government expects CIT to climb further to $37.77 billion, representing another 7.2% increase.
Corporate Income Tax now represents 28% of Singapore’s operating revenue, making it the single largest revenue source. That’s $37.77 billion extracted from business profits whilst the standard CIT rate remains at 17%, one of the lowest in the developed world.
| Country | Statutory Corporate Tax Rate (%) | General Position vs Singapore (17%) |
|---|---|---|
| Singapore | 17% | Baseline |
| United States | ~25–30% (federal + state) | Higher |
| Germany | ~30% (combined) | Higher |
| Japan | ~30% (combined) | Higher |
| Australia | 30% | Higher |
| France | ~26% | Higher |
| China | 25% | Higher |
| India | 30% | Higher |
| Ireland | 12.5% | Lower |
If corporate profits are surging this dramatically above projections, are we capturing the appropriate share for public coffers, or are we leaving money on the table whilst individual taxpayers shoulder more burden?
Goods and Services Tax collections tell a more predictable story. From $21.30 billion in FY2025 to an estimated $22.25 billion in FY2026, GST is growing at a modest 4.5%. This represents 16.5% of total operating revenue.
With the GST rate having increased to 9% in January 2024, this growth trajectory suggests consumption patterns are stabilising rather than surging. For context, whilst corporate profits leapt 7.9% above expectations, consumption-based tax revenue, which disproportionately affects lower and middle-income households, is trudging along at less than half that pace.
The mathematics here are straightforward: regressive consumption taxes remain steady, whilst taxes on corporate profits (which largely benefit shareholders and higher earners) are smashing forecasts.
Vehicle Quota Premiums for FY2025 came in at $8.66 billion, a jaw-dropping $2.06 billion (31.1%) higher than estimated. For FY2026, the Government projects another increase to $9.42 billion.
Let’s be clear about what this represents: nearly $9 billion extracted primarily from high-earning professionals and wealthy individuals who can afford to bid for Certificates of Entitlement. Current COE prices as of January 2026 show Category A (smaller cars) at $102,009, whilst Category B (larger, more powerful vehicles) commands $119,100.
The Budget documents reveal the mechanism behind these sustained high premiums: “Vehicle Quota Premiums are estimated to increase by $0.76 billion (8.8%) to $9.42 billion due to an expected increase in Certificate of Entitlement (COE) quota.”
But this expected quota increase isn’t from structural policy reform, it’s from anticipated higher vehicle deregistration rates as cars reach their 10-year mark; banking on the natural churn of the existing fleet, not expanding access.
Prime Minister Lawrence Wong’s Budget announcement included a significant policy shift that will reshape vehicle ownership calculations. The Preferential Additional Registration Fee (PARF) rebate, designed to encourage early vehicle deregistration, will be slashed by 45 percentage points, with the cap dropping from $60,000 to $30,000.
The stated rationale: “Electric vehicles are less pollutive than conventional petrol cars. As EVs become more common, the need to encourage early deregistration through the PARF rebate is reduced.”
Industry observers note this creates a perverse incentive. Nicholas Wong, CEO of Kah Motor, stated: “The purpose of the PARF is to encourage more new cars on our roads by early de-registration. Now the incentive is reduced, it is counterintuitive.”
The practical effect: Vehicle depreciation increases sharply. For a typical mainstream SUV, the PARF rebate for a nine-year-old car drops from over $8,500 to around $900. For luxury vehicles, the reduction is even more dramatic, from $44,000 to approximately $4,000.
This fundamentally changes the renewal calculation. As automotive consultant Vincent Ng explains: “If the COE price is low, it is attractive to renew instead of de-registering the car. If the COE price is high, then it’s even more attractive because a new car will be more expensive and you have less rebate to factor in.”
Additionally, Motor Vehicle Taxes are projected to surge 17.2% to $2.80 billion in FY2026, driven partly by the cessation of the Electric Vehicle Early Adoption Incentive rebate from 1 January 2027.
Total Operating Revenue for FY2026 is projected at $134.75 billion. The breakdown reveals which Singaporeans are really funding the nation’s spending:
Consumption taxes and vehicle-related charges hit hardest those who can least afford them proportionally, whilst corporate profit taxes, despite impressive absolute numbers, remain amongst the lowest in the developed world as a percentage of GDP.
The Budget 2026 narrative emphasises support packages and future-focused investments. The revenue reality suggests something more complex: the Government is harvesting unexpected windfalls from corporate profits and sustained high COE prices driven by supply constraints, not policy choices to expand access.
Meanwhile, the PARF rebate reduction will likely encourage more vehicle owners to renew their COEs rather than buy new, potentially suppressing future COE supply and keeping prices elevated. This creates a self-reinforcing cycle: high COE prices generate revenue, which the Government has now budgeted for, creating fiscal dependency on sustained high vehicle costs.
For the average Singaporean family navigating rising costs, these aren’t just budget statistics, they’re the mathematical reality of who pays and who profits in Singapore’s economic model.
The question isn’t whether the Government is managing finances responsibly; by most metrics, it is. The question is whether the revenue mix reflects the principles of progressivity and shared sacrifice that underpin Singapore’s social compact.
When corporate taxes surge 7.9% above expectations, whilst GST plods along at 4.5%, and when vehicle-related charges approach $12 billion annually, it’s worth asking: is this the revenue balance we want?
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