INCOME TAX (AMENDMENT) BILL

Order for Second Reading read.

3.35 pm

The Minister for Finance (Dr Goh Keng Swee): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

This Bill seeks to carry out yet another move towards equality of status between men and women in our society. Hitherto, the income of a wife has been aggregated with that of the husband for taxation purposes. Taxation authorities are wary about separating incomes of wives from those of their husbands. Unless proper safeguards are taken, separation of incomes for assessment purposes can give rise to many opportunities for tax avoidance.

At the same time, it is unfair that when a wife is earning an income through her own efforts and in her own right, such income should be, for taxation purposes, considered as accruing to her husband. This Bill seeks to remove this form of injustice hitherto imposed on working wives.

May I first be allowed to clarify the principles underlying the Bill, before going into the implications of the separate clauses? This Bill provides that only the earned income of a wife shall be assessed separately. That is to say, the incomes from property, such as rent, dividends, interest on loans, etc. accruing to a wife shall continue to be aggregated with the income of her husband. This is obviously necessary in order to provide safeguards against large-scale tax avoidance. Where a wife works in the business carried on by her husband, and this business is a sole proprietorship or a partnership, she shall not deem to have earned a separate income except in certain specified profession. The purpose of this is quite clear. We do not want to allow a loophole whereby the husband can put the wife on the payroll of his business, thereby reducing his total tax liability.

Where, however, the wife has her own professional qualifications as specified in clause 4 (b), then her income will be separately assessed from that of her husband, even though she works in her husband's business. This list of professions given includes doctors, lawyers, dentists, pharmacists, accountants, engineers and architects. There may be wives who work either as partners or employees in their husbands' private business, and where the wife is a duly qualified professional, she should be entitled to separate assessment of her income. The range of professions listed in clause 4 (b) is fairly comprehensive, but there may be the odd case in other professions where similar treatment is merited. I therefore intend to move, subject to your consent, Mr Speaker, Sir, and the general assent of Members present under Standing Order 32, an amendment in Committee to allow the extension to other professions. This would enable the Government to grant similar treatment to wives working in other professions than those listed in clause 4 (b). I do not know whether there are instances in other professions where the wife is a partner or an employee of the husband's private business. It is conceivable, for instance, that a private medical practitioner may marry his nurse. These things always happen in the Government service. If such a thing happens in private practice, then I think the nurse deserves the same rights as women in other professions.

This clause, however, is not intended to be used indiscriminately. It must be confined to professions in which certain standards are laid down and observed. Offhand, I can think of professions like nursing, teaching, quantity surveying and valuation. There are professional standards here and registration procedures which will make the task of the Comptroller of Inland Revenue easier.

This Bill will be of benefit to all married women who are employed in establishments unconnected with their husbands' business. There are married women teachers, doctors, clerks, stenographers, architects and so on. Professional married women will enjoy this benefit of separate assessment even if they do work in their husbands' business. But all married women, regardless of their profession, will enjoy this benefit if they are not working in their husbands' business.

The other clauses of the Bill are really consequential to clause 4. They are, intended to regulate the manner in which deductions in respect of relief on account of dependants should be calculated so as to avoid double deduction for the same person.

Sir, I beg to move.

Question proposed.

3.42 p.m.

Mrs Seow Peck Leng (Mountbatten): Mr Speaker, Sir, I agree with the Minister that it is unfair to treat women's salaries as part of their husbands' salaries and assess them as one. I am glad about this Bill. But I cannot understand why this benefit is extended especially to professional women. What about the poor wife who works in her husband's shop, let us say, as a cashier in a little provision shop and who probably receives cash from her husband? Is not her value as much as if her husband had employed another girl who may not be as trustworthy as his own wife? Just because she is working in her husband's shop and just because she is not a professional, she is not to enjoy the benefits of this Bill. What if she is her husband's typist, cashier or stenographer? To add insult to injury, all these people are going to benefit if they do not work in their husbands' firms. So the penalty is, firstly, if they are not professional, and secondly, if they work in their husbands' firms.

Sir, looking at this Bill it gives me the impression that it is going to benefit families in the higher income group. Let us take a clerk for instance who earns $400, and his wife is not working, compared with a man who earns $400 and his wife is earning $400. Mr A's family has to depend entirely on the $400 pay and yet that family is given less relief than the family who is earning $800 (husband $400 and wife $400). That family receives more relief. I cannot understand the logic of this - the more you earn the more relief you are given, an extra $1,000 to the wife. The argument is that the working wife spends more. What about the home, not the wife, with a non-wage-earning wife? It spends more too. It needs more, Sir, because it has less to spend. Sir, this logic that the wife who goes out to earn money needs more money to spend is very dangerous. The Government has just introduced equal pay for women, and equality for women. But while introducing equality between men and women, they are now creating this disparity amongst the women themselves. There are new anomalies now created between professional and non-professional women, non-professional women who work in their husbands' firms, non-professional women who do not work in their husbands' firms, and the non-wage-earning wives. All these new anomalies are quite unnecessary and dangerous. I say they are dangerous because at almost all United Nations conferences, especially when they talk about juvenile delinquency or the status of women, emphasis has always been laid on the deplorable fact that although the services of the non-wage-earning wife as a wife and a mother in the home are of the highest value, which cannot be replaced by any paid services, they have never been given recognition and the appreciation that they deserve. If this Bill is going through, it will further belittle such valuable services of a wife and mother.

I hate to recall that in "The Tasks Ahead" of the P.A.P. they described housework services rendered by a wife to her husband, children and home as slavery aid drudgery of housework. They promised to free women from this slavery and drudgery. I was against it at that time and I am still against it. I deplore this attitude. I am surprised how the women on the Government Bencher allow these terms to be used. I say categorically as a woman that the service we render our husbands is a service to love to the family. A wife does not deserve to be called a wife if she calls those services to her family drudgery and slavery. It is a service of love to the family.

Sir, this Bill emphasises the monetary value of the services of a woman to her family. It will destroy the beauty and the glory of a woman's services that she is capable of rendering to her loved ones. It tends to make the woman feel that, unless she can contribute financially to the family, she is inferior to the wife who can do so and therefore deserves less to spend and needs less. It tends to break the family unit because money will be the criterion of decision. The wife's dignity and respect will depend on how much money she can bring home. Her value will be measured by what financial contributions she is capable of making rather than, as it should be, by how much care and love she is capable of giving and by what a good mother or wife she makes in the home.

Sir, let me as a woman give this warning to the men who are thinking of passing this Bill. Do not be surprised -

The Minister for Culture (Mr S. Rajaratnam): There are also men on the other side!

Mrs Seow Peck Leng: This warning is to all men who have wives who have been caring for them and rendering services of love in their home, especially where there is no necessity for them to go out and work and earn money: do not be surprised if the wives say, "All right, if that is the yardstick, I will go and work. You look after yourselves and the children because the real value of a woman is how much she can earn."

Mr Rajaratnam: Go on strike.

Mrs Seow Peck Leng: Sir, this Bill is going to have a bad effect. It will demoralise housewives. I: will degrade the most important vocation of a woman, which is her services to her husband and children. It will force - probably inadvertently - women to leave their young children at home and go out to work to keep up their prestige especially when there is no need for them to do so. It breaks the family unit because in future money will be the yardstick by which her value to members of her family will be measured. You will agree with me, Mr Speaker, Sir, that this is most undesirable. All this put together is going to disrupt the family. When the family is disrupted and when women start thinking of their services to their husbands and children as drudgery and slavery, it is inevitable, that juvenile delinquency will be on the increase.

Tun Lim Yew Hock: Mr Speaker, Sir, speaking as a man after a woman, I would like to say here -

Dr Goh Keng Swee: Which woman are you after?

Tun Lim Yew Hock: After the woman who has spoken!

Dr Goh Keng Swee: That is better.

Tun Lim Yew Hock: I find it difficult to understand the purpose behind all this. Sir, in the first place, the Government is proud to crow that it has reached an agreement on closer association with the Federation Government. Paper Cmd. 33 of 1961 sets out that in regard to taxes it is Federal. May I therefore ask the Minister whether the Government has had any consultations with the Federation? If so, is the Federation Government going to introduce a similar Bill in order to regularise the income tax laws throughout Malaya?

The Member for Mountbatten has touched on the family unit. I want to touch on it too but from a different angle - from that of a man. In spite of what the P.A.P. profess insofar as culture is concerned, they are now embarking on a scheme that is going to break up the family unit. I remember, and I am sure all married men will remember, what they and their brides said the day they got married: To cherish and to hold; what I have is yours and what you have is mine; we work and live together for the good of the family. But now the P.A.P. say, "Ah, but wives who work belong to a separate class - the P.A.P. class - because if you work, you can submit a separate income tax form for assessment." But what is the benefit? Just $1,000 more and nothing else.. Instead of a $1,000 allowance for the wife which is allowed under her husband's income tax returns, it means that if a wife qualifies under the proposed legislation she is entitled to a personal allowance of $2,000. If that is the case, why should the Government introduce a reduction from $2,000 to $1,000 for wives in 1961? Why place a premium on women who go out to work against women who stay at home to look after the family for the good of the family and of the country? Why? Is that culture? I myself as a man would place a higher value on the woman who stays at home and looks after her family and her house. But the P.A.P. say, "No. If you go out to work, all right, you can have your own income tax." All for a measly $1,000 extra allowance!, That is all - $1,000 extra personal allowance. Instead of $1,000 for a wife under her husband's income tax returns, she will get $2,000 if she submits her own separate income tax returns.

Here again under clause 4, the Minister has brought out this statement. "It is all right. The wife can claim that I am feeding six children and, the husband can claim that he is feeding four children (if there are ten children in the house) so long as the husband and the wife do not claim for the same children." Are we not breaking up the family? Are we not letting our children know that it is the mother that looks after them and not the parents? Are we not trying to do that in this way, to tell your children, "Your mother is looking after you. Your father is no good. No, he cannot even earn." But if there is a family, if it is intended and if they really have their culture of a family unit -

Mr Rajaratnam: It is a family bonus.

Tun Lim Yew Hock: - the Government should not try to do things which tend to disrupt the family unit. To say that a wife can claim that she is supporting three children and the husband is supporting two so long as there is no false claim is to suggest to the wife and to the husband that perhaps it might be better to divide their children just like common property. It cannot be done that way. You cannot deal with human beings in that way.

Dr Toh Chin Chye: Nobody is suggesting that.

Tun Lim Yew Hock: If the Government are really sincere in saying that a married woman who earns should be allowed an extra $1,000 off, then why not do it through the simple process of including that in the income tax returns of her husband? If the wife works, all right, $2,000 allowance; and if the wife does not work, $1,000 allowance. But why should there be a difference? Even if the Government were to do that, I would ask them, why there should be that difference of $1,000? Does it mean that wives have a different value whether they work or they do not work? What I am more anxious to know is this. Have the Government consulted the Federation Government in the light of Paper Cmd. No. 33 that the taxes are going to be Federal? If they have, I want to know whether they have been told that the Federation Government will introduce similar legislation. If they have not, I want to know why it is that after having come to an agreement with another Government in all honesty, they now do something to show that they cannot be trusted, as we know that they cannot be trusted.

Dr Thio Chan Bee: Mr Speaker, Sir, I would like to have clarification on two points. Firstly, can the Minister assure us that the relief of $3,000 in the case of the husband's income for his wife will not be interfered with if his wife is not employed? Because if by the wife working the husband is penalised, then of course that would not be fair to the husband. I just ask the Minister for clarification.

Sir, on 11th December, 1961, I raised the question of income tax relief for aged parents and the reply was - to paraphrase it - that the Finance Minister had not given thought to that and that in view of the fact that income tax legislation would be a Federal subject he would not give any thought to that for the time being. In view of the fact that he has now brought up this amending Bill, I therefore infer that he must have consulted the Federal Government on this subject. If he has done so, can he please tell me whether he has also consulted the Federation Government as regards relief for aged and dependent parents, because in this country we do not have pensions for old people, whereas they have them in England?

4.00 p.m.

Mr Speaker: Dr Goh, in reply?

Dr Goh Keng Swee: Sir, I listened with some astonishment to the speech of the Member for Mountbatten. Truly, Sir, you can never satisfy women! I was all the time wondering whether we should have proceeded with the wisdom of ever giving anything to women. However, I think she, in fact, deep down in her heart, fully approves of the principle of this Bill, but party discipline having been imposed on her, she had to raise some objections.

Mrs Seow Peck Leng rose -

Mr Speaker: On a point of elucidation?

Mrs Seow Peck Leng: A question, Sir, I would like to inform the Minister that I am all in agreement with the Bill except for the fact that wives who are not working get less relief. I am suggesting that they should get as much relief in separate returns for income tax - a relief of $2,000 for women who are working. I am asking for more.

Tun Lim Yew Hock: They are never satisfied.

Dr Goh Keng Swee: Well, there you are. You can never satisfy them!

Now, I will deal with the points that she raised, one by one. First, the extension of benefits to professional women, and not giving them to all wives as, for instance, the old lady who looks after a sundry shop. Where a man runs a family business and the wife takes charge of the till or the counter now and then, it is clear that in such a family business it is only fair that the income accruing to the whole business should be treated as one unit. That is a natural taxation entity. The other point is that you just let open loopholes for a terrific amount of tax avoidance, and that we are not prepared to do.

The point was raised about the effects of this Bill on breaking of family units - demoralising housewives and forcing them to work. I cannot follow this logic. I have listened to both the Member for Mountbatten and the Member for Cairnhill, and I cannot follow their logic.

Tun Lim Yew Hock: It is a different line.

Dr Goh Keng Swee: Mr Speaker, Sir, that is quite simple. This is nothing new tried out in other countries. There has been no collapse of families and institutions in those countries, and there is not going to be any collapse or break-up of family spheres as a result of this Bill.

In fact, all the three speakers, I think, misunderstood the effect of this Bill. They thought that the only benefit this Bill would confer on the taxpayer is to increase the personal allowances of working wives. That is not correct. When the income of a wife is taxed separately, then both the husband and the wife will pay income, tax at lower rates, and this is a fairly substantial benefit which they will get.

Therefore, if you treat the wife as a separate taxpayer, naturally she will get the full benefit of personal allowances. Now it is not possible to give the assurance which the Member for Tanglin sought - that the man should get personal relief even when his wife is working. That is a bit thick. You cannot get it both ways. If the wife is working, she `should be exempt from taxation. This is separate. This is set out clearly in clause 3 (a). This clause, in conjunction with section 39 of the principal Ordinance, sets out that if the wife earns less than $1,000 a year, then what she earns will be deducted from the personal allowance. And, of course, if she earns more than $1,000 a year, then the husband gets no relief in respect of his wife.

The Member for Tanglin raised the question of tax relief for aged parents. I do not know whether I should really reveal this to the House, but I did have a brief and informal discussion with the Minister for Finance in the Federation, and we both came to the conclusion that there is no case for proceeding with it. I am sorry to disappoint the Member for Tanglin; he looks a bit dejected, I thought.

As for consultations with the Federation, we informed the Federation of our intention to proceed with this Bill and asked whether they would raise any objection. My Permanent Secretary brought up the matter before his opposite number several times, and I personally wrote to the Finance Minister in Kuala Lumpur asking whether he had any objection. After a reasonable passage of time, we did not hear from them and we proceeded with our own scheme. My understanding of this is that they themselves have not made up their minds on this issue, but since we are proceeding with equal pay for women, it is logical that this measure should be taken at about the same time.

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.

[Mr SPEAKER in the Chair]

4.08 p.m.

Clauses 1 to 3 inclusive ordered to stand part of the Bill.

Clause 4 -

The Chairman: The Minister has indicated that he wishes to move an amendment,

In page 3, line 10, after "architect", to insert", and any other profession as may be approved by the Minister and notified in the Gazette,".

No adequate notice has been given, and therefore Standing Order No. 32 applies. I give my consent. Is it the pleasure of hon. Members that the amendment be moved? No dissenting voice. Dr Goh.

Dr Goh Keng Swee: Sir, I move,

In page 3, line 10, after "architect", to insert", and any other profession as may be approved by the Minister and notified in the Gazette,".

Sir, on the Second Reading I have gone into the reasons why such an amendment is necessary, and I do not think I need repeat the argument here.

Amendment agreed to. Clause 4, as amended, ordered to stand part of the Bill.

Bill reported with an amendment; read a Third time and passed.