While we won’t see an immediate impact from these policies, the increase in water prices and carbon taxes might cost you.
Here at SingSaver.com.sg, we’re big fans of the environment. Saving water and lowering pollution are things we celebrate.
That said, we also need to be realistic about money. With Budget 2017 announcing a water price hike, and the new carbon tax incentives, there is a reasonable chance that we’ll see some price increases in Singapore.
Here’s why that could happen:
The Water Price Hike
Budget 2017 has raised the price of water by 30 per cent, as of July 1st. The has an obvious impact on your water bill, but that’s something you can control. Just take shorter showers, don’t leave the tap running when you brush your teeth, and so forth. What you can’t control is the impact on a business.
The current prediction is that the extra cost, to 75 per cent of businesses, will be less than S$25 a month. However, a quarter of all the businesses in Singapore still adds up to thousands of companies, and some are more clearly affected than others.
For example, Food and Beverage (F&B) outlets tend to use more water – not only for drinking but also for cooking and the constant washing up that’s required. Laundromats, car washes, clubs with swimming pools and jacuzzis, etc. are all likely to see prices go up.
Now businesses have three options here. They could try to cut back on water use, but that may not be possible in certain industries. They could try to absorb the cost, lowering their profits in order to cope.
This is not something business owners like for obvious reasons; the only reason they’d do this is fear of losing customers. The third option, of course, is to factor their rising operating costs into their prices.
Hopefully, businesses will decide that the cost of losing customers outweighs the cost of absorbing rising water costs. But Singaporeans had best brace themselves – that bowl of fishball noodles may become a little more expensive.
The New Carbon Taxes
Singaporean businesses will soon be taxed S$10 to S$20, for every tonne of greenhouses gasses they emit. Greenhouse gasses contribute to global warming, which is a major problem for small islands like Singapore (unless we can all grow gills).
However, the businesses that are the heaviest emitters of greenhouse gasses tend to be major industries. The most glaring example would be businesses involved in the generation of electrical power, which typically means gas or coal. These businesses could find themselves saddled with much higher bills, that they then pass on to buyers.
Other businesses, such as the airline industry, may also start to see their costs rise with the implementation of carbon taxes.
In an ideal scenario, this will see companies become more efficient, and work to produce “cleaner” devices. Companies that cannot do this will end up paying higher taxes, which means either lower profits, or pushing their costs onto the buyers.
Singaporeans Need to See How Businesses Respond
We probably won’t see an immediate impact from these policies, not until a year or two down the road. By then, businesses should either figure out a way to cope, or raise their prices.
One thing’s for sure however: both policies are here to stay, and we’ll have to adapt.
Use the Right Credit Card to Save on Everyday Costs
Should these price hikes happen, you can offset some of the costs with the right credit cards. Credit cards that give rebates for utilities can help you save on water costs and other recurring household bills.
Should the price of air tickets go up, you can earn your way to a free flight with an air miles credit card like the Citi PremierMiles Visa Signature card. Meanwhile, credit cards like the OCBC 365 Card will help you save on restaurant meals, with 3% dining cashback on weekdays and 6% dining cashback on weekends.
You can compare the best credit cards at SingSaver.com.sg.
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By Ryan Ong
Ryan has been writing about finance for the last 10 years. He also has his fingers in a lot of other pies, having written for publications such as Men’s Health, Her World, Esquire, and Yahoo! Finance.