Six things to watch in Budget 2026: AI push, smaller CDC payouts, more upskilling

[SINGAPORE] Prime Minister and Minister for Finance Lawrence Wong will deliver the Budget statement on Thursday (Feb 12) at 3.30 pm.The Business Times will have real-time updates on its Budget blog and a livestream of the speech on BT’s website and Budget microsite.Budget 2026 will be the first since last year’s General Election and the first in this term of government. Among other things, PM Wong is expected to respond to the Economic Strategy Review’s (ESR) midterm recommendations that were announced in late-January.With a larger-than-expected fiscal surplus anticipated thanks to higher tax takings, observers are also expecting Budget 2026 to remain supportive overall, with spending focused on targeted relief and long-term priorities.1. Preparing for the AI eraWatchers widely expect Budget 2026 to roll out initiatives to support businesses and workers to build artificial intelligence (AI) capabilities. AI was also a key theme of ESR’s recommendations. The committees called for Singapore to double down on AI adoption, and introduce a national AI skills strategy.Targeted support for mid-career and older workers over 40 years to upskill and reskill is also anticipated.Observers also expect an update to Singapore’s National AI Strategy. Launched in 2019, the strategy was last updated in 2023, when generative AI became mainstream.Potential measures may include support for job redesign and efforts to boost employee productivity.2. Securing jobs, easing manpower crunchObservers believe Budget 2026 is unlikely to bring sweeping manpower changes, but rather targeted adjustments focused on migrant labour access, workforce transformation and support for different worker segments.In a video on Jan 27, PM Wong noted Singaporeans’ concerns about “the uncertain external environment, the impact of technology and AI on jobs and also on cost pressures”, which Budget 2026 will address. The ESR committees called for stronger career transition support for displaced workers, while the National Trades Union Congress is pushing for mandatory advance retrenchment notifications and enhancements to the Jobseeker Support Scheme.For younger and mid-career workers, there could be expanded training and upskilling support.For businesses, Manpower Minister Tan See Leng recently signalled refinements to the local qualifying salary. Other policies that could see tweaks include the Non-Traditional Sources Occupation List and the Complementarity Assessment Framework.3. CDC vouchers no more?Budget 2026 could see the end of the Community Development Council (CDC) vouchers with observers expecting smaller payouts and tighter eligibility criteria.This could mean payouts of S$400 to S$500, down from the S$800 that Singaporean households received in 2025, with lower-income households receiving greater relief.4. Internationalisation push for businessesAside from driving AI adoption, Budget 2026 could see initiatives to drive internationalisation and sustainability.These were key themes in the ESR committee’s proposals, which called for businesses to invest in sustainable technologies and pursue overseas ventures with higher risk and higher capital outlay.In particular, SMEs can expect further assistance to help manage rising costs, strengthen resilience and support overseas expansion as they diversify markets. Watchers also anticipate continued support for digitalisation and productivity improvements to help firms stay competitive. 5. Carbon tax claritySingapore’s carbon tax regime could see adjustments in Budget 2026 as the government faces pressure to provide clarity on rates beyond 2027.The tax currently stands at S$45 per tonne of emissions for 2026 and 2027, with plans to increase it to between S$50 and S$80 per tonne by 2030. The exact landing point and pathway from 2028 onwards have not been announced, creating uncertainty for businesses planning decarbonisation investments.Watchers have asked for the 2030 rate to land closer to the lower S$50 per tonne threshold to ease operating costs amid global uncertainties. They have also called for raising the carbon credit offset cap to 10 per cent from 5 per cent of emissions to provide flexibility for large emitters.6. Wealth taxes on the cards?Budget 2026 could see “wealth-adjacent” levies targeting high-value assets, following the Ministry of Finance’s first-ever release of official wealth data in an occasional paper released earlier this week.In response to the findings, PM Wong has highlighted the need for “refreshed approaches” to maintain social mobility.While the government has not given specific policy commitments, the decision to formalise the measurement of non-employment income could signal future policy moves.For more of BT’s Budget 2026 coverage, go to bt.sg/budget26