TAX RELIEFS ON PREMIUMS FOR GROUP MEDICAL INSURANCE SCHEMES

Inche Abdul Aziz Karim asked the Minister for Finance if he will consider granting tax reliefs on premiums for group medical insurance schemes which have been introduced by collective agreements, in the same manner as reliefs are allowed on premiums for life insurance policies and contributions to provident funds.

Mr Tang See Chim (for the Minister for Finance): Mr Speaker, Sir, premiums for group medical insurance under most collective agreements are payable by employers. As such, they are trade or business expenses and have always been deductible from income for tax purposes.

There are a few schemes under collective agreements in which employees may voluntarily participate and make small payments to cover themselves and their families for hospitalisation and surgical benefits. Under the law, medical expenses of the community at large are not deductible for income tax purposes and there is no valid reason to give special relief for contributions by employees to group medical insurance schemes.

Such contributions are similar to payments for personal accident policies, for which no income tax relief is given, and are not in the same category as provident funds or life insurance policies which are, in fact, savings schemes, although the latter provide for capital sums being payable on death.

Inche Abdul Aziz Karim (Kallang): Does the Parliamentary Secretary not recognise the fact that if group medical insurance schemes become popular, it will be a great boon to the Government in the sense that members of medical insurance schemes who become hospitalised will generally get themselves warded in Class I and Class II wards instead of the virtually free Class III wards?

Mr Tang See Chim: Medical insurance schemes are for the benefit of the persons taking out these schemes. As a general rule, there is no income tax relief for accident schemes and, as I have just said, they are not in the same category as life insurance schemes which are, in fact, savings schemes.

Inche Abdul Aziz Karim: Will the Parliamentary Secretary consider changing the Income Tax Ordinance so that tax relief can be granted on premiums paid for medical insurance schemes?

Mr Tang See Chim: My Ministry has found no valid reason for making any change to the existing Income Tax Ordinance so as to give relief to such contributions.