Vast majority of working mothers ‘not affected by tax relief cap’

SINGAPORE — Addressing concerns that a new cap on tax relief could contradict the Government’s message to encourage procreation, Finance Minister Heng Swee Keat on Wednesday (April 6) reiterated that the vast majority of working mothers claiming tax relief would be unaffected, including those with two or three children.

Speaking in Parliament, he pointed out that the Government introduced the S$80,000 cap on personal income tax reliefs to apply to the total amount of all reliefs claimed.

Currently, there are 15 personal income tax reliefs and if taken together, they can “unduly reduce total taxable incomes for a small proportion of individuals”.

“After studying the reliefs, we concluded that we need to moderate the effects of large amounts of reliefs claimed, in order to preserve equity in our tax structure,” said Mr Heng in his speech to wrap up the Budget debate. “We have to maintain fairness between different groups of taxpayers, in particular between those who earn more, and those who earn less.”

During the three-day debate, Members of Parliament, such as Ms Tin Pei Ling, Dr Lee Bee Wah and Ms Joan Pereria, had asked if the cap on personal income tax relief contradicts the Government’s message to encourage procreation.

The cap, announced by Mr Heng during his Budget statement last month, allows each person to claim only up to S$80,000 in personal income tax relief every year. It will start from Year of Assessment 2018.

Mr Heng told Parliament on Wednesday that the vast majority of taxpayers are unaffected by the cap, and 99 per cent of tax resident individuals can continue to claim their reliefs fully.

He added that even with the cap, nine in 10 women claiming the Working Mother’s Child Relief (WMCR) — which encourages married women to remain in the workforce after having children — will not be affected.

For those with bigger families, slightly over eight in 10 individuals claiming the WMCR on two or three children are not expected to be affected by the cap.

Mr Heng also noted that over the years, the Government has added, and significantly enhanced, various schemes to support Singaporeans in “fulfilling their marriage and parenthood aspirations”.

For example, the Marriage and Parenthood Package includes the Baby Bonus Cash Gift and Child Development Account First Step grant.

Subsidies for all Singaporean children at the school and preschool levels are also “very significant”.

Mr Heng added that the support given to families extends “beyond monetary support” and includes the Government’s wider push to make it easier for families to balance their work and life commitments, such as extending parental leave.

Last month, Senior Minister of State in the Prime Minister’s Office Josephine Teo, who oversees population matters, said the second week of paternity leave, now voluntary for employers, will be made compulsory.

Mr Heng said on Wednesday that the National Population and Talent Division will elaborate more on the Government’s marriage and parenthood strategy during the Committee of Supply debate.