NON-WORKING RETIRED PERSONS (Exemption from income tax)

Mr Teong Eng Siong asked the Minister for Finance if he will consider introducing amending legislation to exempt non-working retired persons from income tax as this will enable the Government indirectly to look after their welfare during retirement.

Mr Goh Chok Tong (for the Minister for Finance): Sir, for resident pensioners, some measure of relief is already provided since half of the pension is tax exempt. However, a non-working retired person may also derive substantial investment income in the form of dividends, interest, rents and so on. If such a person were exempted from paying income tax, he would be better off than another person who has to continue working after reaching normal retirement age because of financial needs. To encourage pensioners to continue working, our tax laws provide enhanced relief for them. Thus an individual who is above 55 but below 60 years of age is entitled to an earned income relief of $2,000, while an individual who has attained the age of 60 will get a relief of $3,000 instead of the usual relief of $1,000. This has the effect of encouraging persons who attain normal retirement age to continue to be gainfully employed. The exemption of non-working retired persons would be contrary to the rationale behind the granting of enhanced earned income relief.