EMPLOYMENT OF FOREIGN MAIDS TO LOOK AFTER YOUNG CHILDREN (Tax relief for working widowers and male divorcees)

Mr Teo Chong Tee asked the Minister for Labour whether he will consider granting tax relief to working widowers and male divorcees who have to engage foreign maids to look after their young children, in view of the proposed increased levy on foreign maids.

The Minister for Labour (Dr Lee Boon Yang): Mr Speaker, Sir, Questions 5 and 6 are somewhat related. May I have your permission to take both the Questions at the same time?

Mr Speaker: Yes, you may.

Dr Lee Boon Yang: Mr Speaker, Sir, on Mrs Yu-Foo's Question, the main objective of the foreign maid levy is to moderate the demand for foreign maids. The levy must be the same regardless of who the employer is or what the maid is to be employed for. The Government is not in a position to determine the needs of various households and impose different levels of levy according to household needs.

Sir, presently, as an incentive for people to look after their aged parents, a tax relief of $3,500 for each dependent parent staying in the same household is granted to taxpayers. The savings from this tax relief will offset part of the cost of looking after aged parents.

Mr Speaker, Sir, on Mr Teo Chong Tee's Question, I sympathise with working widowers and male divorcees who have to look after young children. However, the objective of the double tax relief for foreign maid levy is to encourage married women to join the workforce and at the same time have children. It is not meant to help all employers of foreign maids. The double tax relief scheme is only two years old. We should make changes after we have sufficient experience to assess its impact on the demand for foreign maids.

Mr Low Thia Khiang: Sir, does the Minister agree that the employment of domestic maids would also improve the quality of life?

Dr Lee Boon Yang: I would agree with the Member that employment of domestic maids does improve the quality of life. But that does not mean that the Government should not regulate the influx of foreign maids into Singapore. If we are talking of improving the quality of life purely from the point of employing maids, then I would like to remind the Member that there are more than 600,000 households in Singapore. And if that is his only answer for improving the quality of life for these 600,000-odd households, then I fear that Singapore will have an overwhelming number of foreign maids in the future.

Mrs Yu-Foo Yee Shoon (Yuhua): Sir, I support that there should be control of foreign maids. I would like to ask two supplementary questions. First, will the Minister consider other measures to reduce the demand for foreign maids, other than by increasing the foreign maid levy alone? The other question is: will the Minister consider a higher levy on the second maid of the same employer?

Dr Lee Boon Yang: Mr Speaker, Sir, on other measures to control the demand for foreign maids, my Ministry will always consider any useful suggestions that the Member or any other Member including members of the public have to make to us. At the moment, we feel that the levy is an effective mechanism and is one that should be used unless a better alternative is found. For the Member's information, my Ministry has over the years received more than 20 suggestions on how to control foreign maids other than using the levy as a mechanism. In the course of the budget debate, with your permission, Mr Speaker, I will have time to elaborate on some of these measures that have been proposed by members of the public and also to give my Ministry's response to why they would not be workable in most cases.

On the other supplementary question of whether my Ministry will impose a higher levy for those who are employing a second maid, my Ministry has responded, both in the media and on other occasions, that the number of employers with second maids, in other words, households with more than one maid, is very small. In fact, less than 3% of the 65,000-odd employers of foreign maids actually employ more than one maid. Hence, a second tier levy for those who employ more than one maid is not likely to curb the demand for more maids. And last year's increase of more than 20% in demand for foreign maids did not come from people who were applying for a second maid. The demand largely came from people who were just applying for their first maid. Hence a higher levy is not likely to solve the problem. But I would not rule out a higher levy if, in the future, the number of people employing a second maid should increase at an unacceptable rate.

Mr Chiam See Tong (Potong Pasir): Sir, I think the more important question is: after the increase in the levy, is there an increase of foreign maids? Or has the number reduced?

Dr Lee Boon Yang: Mr Speaker, Sir, the increase in the levy for foreign maid will be effective from 1st April. From past experience, after each revision of the levy the demand for foreign maids drops. Demand will stay low. It drops from the previous high for a period of time, after which it may pick up again. The fact that it does pick up again later on is a reflection more of the economic growth achieved by the country, rather than the inefficiency of the foreign maid levy as a means of regulating the demand. What happens is that over time, with economic growth, people's income rises. Therefore, the previous revision of the levy becomes more affordable and more people will then apply for their maids.

Mr Chiam See Tong: What sort of timeframe has the Minister in mind before the demand picks up again with this $50 increase?

Dr Lee Boon Yang: Mr Speaker, Sir, we will monitor the demand after 1st April and see whether the drop has been substantial before we review the situation.