INCOME TAX (AMENDMENT NO. 2) BILL

Order for Second Reading read.

4.45 p.m.

The Minister for Finance (Dr Goh Keng Swee): Mr Deputy Speaker, Sir, I have the Yang di-Pertuan Negara's recommendation that this Bill be proceeded with. I beg to move, "That the Bill be now read a Second time."

Sir, the object of this Bill is to give effect to the proposals to reduce the rate of personal allowances on income tax and to provide for an "earned income relief" which I outlined in the Budget Statement.

[Mr SPEAKER in the Chair]

The Minister for Finance (Dr Goh Keng Swee): The definition of "earned income" for the purposes of the new tax relief is provided in clause 2 of the Bill.

The proposed reductions in the rates of relief are contained in clause 3. The allowances will be reduced to $2,000 for an individual and $1,000 for his wife. These deductions will bring our income tax rates closer to those of the Federation. The impact of these reductions is diminished by the new "earned income relief" which is provided under the same clause of the Bill, and is set at 20 per cent of earned income subject to a limit of $1,000. The average worker will hardly be affected by these changes in the tax structure, because the 20,000 or so new tax payers will only have to pay a total of $750,000 per annum or an average of $37 each per year. The maximum amount any new taxpayer will have to pay is $20 a year if he is a bachelor and $50 a year if he is married without children. The maximum payable by any new taxpayer with three children will be $12.50 a year. I am sure, Sir, that Members will agree that this is neither iniquitous nor a hardship on the lower income groups. As I have said previously, the average family in Singapore does not pay income tax until their earnings from work reaches the region of $500 per month, even with the proposed reductions of personal allowances. It is relevant also to note that for a family of five with an income of less than $10,000, or for a married couple without children, with an income of less than $9,000 or for a bachelor with an income of less than $8,000, the tax in Singapore is lower than the tax in the Federation. Therefore, Mr Speaker, Sir, it cannot be said that our tax rates are onerous.

Sir, I beg to move.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole Assembly.

Assembly immediately resolved itself into a Committee on the Bill.-[Dr Goh Keng Swee].

Bill considered in Committee; reported without amendment; read a Third time and passed.