INCOME TAX (Exemption for persons earning $6,000 per annum or less)

Mr Ng Kah Ting asked the Minister for Finance if he will consider introducing amending legislation to exempt a person, who earns $6,000 per annum or less from payment of income tax, in view of the increase in the cost of living during the last few years.

The Minister of State for Finance (Mr Tang See Chim) (for the Minister for Finance): Mr Speaker, Sir, the burden of income tax in Singapore is low because of the generous personal reliefs and the graduated rates of tax. At present about 120,000 out of 650,000 working persons are liable to income tax.

Under the Income Tax Ordinance a taxpayer is allowed personal relief of $2,000 plus an earned income relief of 1/5th of his earned income up to a maximum of $1,000. A relief of $1,000 is given in respect of his wife, $750 in respect of his first child, $500 each for the second and third child, and $300 each for the fourth and fifth child. In addition, the taxpayer is allowed deductions on his life insurance premiums and compulsory contributions to the Central Provident Fund equivalent to that of the income up to a maximum of $4,000.

The existing reliefs and personal deductions considerably reduce the burden of income tax. A married taxpayer, earning $6,000 per annum for example, with two children, will have to pay income tax of only $9, and a single person earning $6,000 per annum will be liable to pay income tax of $144. A married couple earning $6,000 per annum, but without children, will have to pay income tax of $84.

There is, therefore, no reason why taxpayers in this income group should not make a small contribution towards paying for the security, educational, social and medical services of Singapore which are enjoyed by their families and by them.

The International Monetary Fund Mission, which studied our tax structure during 1969, has stated that our personal reliefs and deductions are generous and could well be reduced.