First lot of Economic Restructuring Shares is given out

On 3 May 2002, then Deputy Prime Minister Lee Hsien Loong announced that a S$3.6-billion Economic Restructuring Shares (ERS) scheme would be implemented to help Singaporeans cope with increases in the Goods and Services Tax (GST) for at least five years.^[1] The GST was increased from 3 percent to 4 percent on 1 January 2003, and then to 5 percent in 2004.^[2] The ERS scheme constituted a major portion of the S$4-billion FY2002 GST Offset Package.^[3]

To qualify for the ERS scheme, one would have to be a Singapore citizen as at 1 December 2002, at least 21 years of age on 1 December 2002 and contributed at least S$50 into his/her Central Provident Fund account in 2002, among other criteria.^[4] Similar to the New Singapore Shares introduced in 2001, each share was worth S$1 and earned annual dividends over a five-year period from 2004 to 2008.^[5] The bonus rate was calculated at a rate of 3 percent plus the real GDP growth rate of the preceding calendar year, with a minimum guaranteed 3 percent.^[6] Shares worthbetween S$600 and S$1,400  were disbursed to Singaporeans over a three-year period starting from 1 January 2003. The quantum was dependent on the annual value of their home based on records from the Inland Revenue Authority of Singapore on 1 December 2002, 2003 and 2004.^[7]

Singaporeans were given a choice to encash their ERS any time. Those who chose not to do so earned tax-free dividends each year in the form of bonus shares that were payable every year on 1 March from 2004 to 2008.^[8] Singaporeans who held on to their ERS received 10.7 percent worth of bonus shares on 1 March 2008 as the final dividend payment. The ERS closed on 1 September 2008.^[9]

References
1. Teo, L. (2002, May 4). $4b offset package to help cushion GST hike. The Straits Times, p. 2. Retrieved from NewspaperSG.
2. Henson, B. (2002, December 6). GST hike in two steps; reliefs stay. The Straits Times, p.1. Retrieved from NewspaperSG.
3. Ministry of Information, Communications and the Arts. (2008, March 1). Ministry of Finance: 10.7% bonus shares for Economic Restructuring Shares (ERS) [Press release]. Retrieved September 8, 2014, from National Archives of Singapore website: http://www.nas.gov.sg/archivesonline
4. The Straits Times, 4 May 2002, p. 2.
5. The Straits Times, 4 May 2002, p. 2.
6. Ministry of Information, Communications and the Arts, 1 Mar 2008.
7. Choong, W. (2002, May 18). Idea to raise $200m from wealthy. The Straits Times, p. 8. Retrieved from NewspaperSG; The Straits Times, 4 May 2002, p. 2.
8. Government of Singapore. (2008). What are Economic Restructuring Shares? Retrieved September 8, 2014, from Overview of Economic Restructuring Shares and New Singapore Shares schemes website: http://www.mof.gov.sg/ers/ers_ovw.htm
9. 10.7% bonus payout today. (2008, March 1). The Straits Times, p. 54. Retrieved from NewspaperSG.