INCOME TAX RELIEFS FOR CHILDREN (Statement by the Minister for Finance)

2.34 p.m.

Mr Hon Sui Sen: On 24th October, 1972, my colleague, the Minister for Health, announced that, among measures being taken to encourage small families, would be one reducing from five to three the number of children for which income tax reliefs will in future be allowed. The existing allowances for children, i.e, the amounts which may be deducted from income to be taxed, are as follows: - For the 1st child, $750 For the 2nd child, $500 For the 3rd child, $500 For the 4th child, $300 For the 5th child, $300

The changes in reliefs which will take effect from the year of assessment 1974 will be as follows: - For the 1st child, $750, as at present. For the 2nd child, $750, increased by $250 from the present $500. For the 3rd child, $500, as at present. There will be no allowances for subsequent children. The deductions are in line with the Government policy of encouraging two but discouraging more than three children in the family.

The new reliefs will apply to parents who have three children or less on 1st August, 1973. Any fourth or subsequent child born to such parents after 1st August, 1973, will therefore not get any relief. However, parents who already have more than three children on 1st August, 1973, will continue to be eligible for their present allowances for these children. It is not the intention to cause hardship to those who already have more than three children in the family and cannot do anything about it.

There will be an additional variation. The Act provides that, at present, a married woman who has earned income may opt to be assessed separately from her husband. This provision has given a more advantageous tax treatment to married women who are working. The option will remain so that all married women who are economically inactive will be encouraged to work and ease the manpower shortage in Singapore.

To further induce the more highly qualified and professionally trained married women to work, I have decided also to make the tax reliefs for children more attractive for them. In the case of such highly qualified married women who have three children or less on 1st August, 1973, and who elect to claim the tax reliefs for their children in their assessment, there will be enhanced reliefs as follows: - For the 1 child $750 or 5 per cent of the earned annual income subject to a maximum of $2,000. For the 2nd child $750 or 5 per cent of the earned annual income subject to a maximum of $2,000. For the 3rd child $500 or 3 per cent of the earned annual income subject to a maximum of $2,000.

It is hoped the enhanced reliefs will serve to reverse any tendency for highly qualified and professional married women to give up their careers to look after their children. Since these women have undergone expensive training, it would be a waste of such training if they stop working.

Mr N. Govindasamy (Telok Blangah): I have two questions to ask the Minister, Sir. First, how does the Minister propose to defind a married woman who is highly qualified and one who is not? Secondly, on the question of tax reliefs, will those people, who now have four children but are not eligible for income tax at the moment, get tax reliefs for these four children later when they become eligible for payment of income tax?

Mr P. Govindaswamy (Anson): Mr Speaker, Sir, the Minister has given increases in tax reliefs for children. May I ask him what about reliefs for dependants? There are many dependants in a family, such as the father and mother. Therefore, can he give any relief for these dependants, so that the wage earners might get some allowance?

Mr Hon Sui Sen: Mr Speaker, Sir, if I may take the first speaker. He has asked about the definition of "specially qualified persons". The definition will be given in the amendment to the Act, which will have to be drafted. It is intended to define it as a married woman who has obtained a degree from an institution providing tertiary education, or who is a member of a professional body oz group regulated by statute, or any other profession as may be approved by the Minister and notified in the Gazette.

On the second question, as regards children who at present are not yet given tax reliefs because there is no claim yet for income tax from the parent, the intention is that the present position will remain for those who, as I have said, already have more than three children and are not able to do anything about it.

On the other question, which has been posed by the Member for Anson, I am afraid that my present amendment of the Act does not cover the question of relatives.

Mr N. Govindasamy: Mr Speaker, Sir, would a teacher be considered as a person with specialised professional training as such, and be entitled to reliefs just now propounded by the Minister?

Mr Sia Khoon Seong (Moulmein): Mr Speaker, Sir, I would like to ask the Minister for Finance what is the logic of discriminating the professionally qualified from those who are not professionally qualified, when the question of encouragement for greater participation in the economy of the country does not lie only in getting more pro fessionally qualified women involved. The shortage of manpower today falls within all categories - from the highly-trained workers to the less skilled workers. Recently, there was an attempt to encourage married women to work in the factories and so on, where there is a serious shortage of such manpower. Therefore, I would like to know what is the logic behind the rationalisation of granting these reliefs only to women who are classified as professionally qualified.

Mr Hon Sui Sen: Mr Speaker, Sir, on the question whether teachers are to be considered as professionally trained persons, it does not come within the definition which is being proposed. But there is no reason why consideration cannot be given if it is intended that this definition would apply to them. However, I think that within the reliefs granted, it is unlikely that most of the teachers would qualify for more than the $750.

On the logic of differentiating the professionally qualified from those not so qualified, again I think the same arithmetic applies in both cases. And the further logic is that, as I have mentioned in my statement, these professionally qualified married women have been trained at very great expense, and it would be an economic waste if we do not make use of this kind of training.

Mr Sia Khoon Seong: Mr Speaker, Sir, I fully agree with the Minister that professionally qualified women who have undergone a considerable amount of training should be encouraged to come forward, as it would be a waste not to use their talent and ability. Such measures are desirable and I accept and support them. However, my point is this: why should the same encouragement not be given also to the others? There is also a shortage of manpower in the other categories of workers. The move should be to encourage our women-folk to come out of their households to participate in our economic development.

Mr Hon Sui Sen: Mr Speaker, Sir, I agree very much with that sentiment. But I think the logic of arithmetic applies here. The fact is that unless they are in the $15,000 per annum bracket, they would not qualify for additional reliefs.

Mr Sia Khoon Seong: Mr Speaker, Sir, arithmetic is something that is worked out, and it can be changed if the Government so decides. But what I am asking is this: has not some thought been given to this point that arithmetic can be changed? An attempt is made to give tax reliefs to the professionally qualified women. It is an indication that the Government is conscious of wanting to draw out this particular category of workers. What I am saying is, why is the same consideration not given to the other categories of women workers? There could be some other method by which the same purpose of drawing more women to participate in our economic development could be achieved.

Mr Hon Sui Sen: Mr Speaker, Sir, I do not think I have very much to add to what has been said. The fact that any married woman who is earning income can apply for a separate assessment of her income is already an inducement to her to go to work. So there is already an incentive. If there are any other ideas of further incentives which the Member may have, I would be very grateful if he would pass them on to the Treasury for consideration.