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Amended: Support for working mums go beyond tax reliefs
THE support the government gives to working mothers so they can juggle parenthood commitments extends beyond tax reliefs, so those who are affected by the new cap of S$80,000 should view it in the right mindset, Finance Minister Heng Swee Keat said in Parliament on Wednesday.
He said the cap was imposed to ensure that Singapore's tax system is more equitable as a whole.
"In fact, our (the government's) support extends beyond monetary support ... It's about having the right mindset. Fundamentally, having a child is about the joy of parenthood," he said.
He was responding to points raised by Members of Parliament (MP), who have, in the last three days of debate on the Budget, asked why the government is moving to impose the cap, which will seem to hit high-earning mums the hardest.
There are 15 kinds of personal income tax reliefs, with the Working Mother's Child Relief (WMCR) being the most substantial one.
A working mother can claim up to S$50,000 per child in total child reliefs, whether she is married, divorced or widowed.
With the cap, high-earning mothers will be hit the hardest, some MPs had said. They suggested that the cap be lifted for widowed or divorced mums; other MPs said some mums are upset at what the move signifies.
In his response, Mr Heng said that when taken together, the different kinds of tax reliefs "can unduly reduce total taxable incomes for a small proportion of individuals".
"We have to maintain fairness between different groups of taxpayers, in particular between those who earn more, and those who earn less," he said.
The cap will kick in from Year of Assessment 2018, and is expected to raise an additional S$100 million a year.
Mr Heng said that 99 per cent of tax-resident individuals are unaffected by the S$80,000 cap; even among mothers claiming WMCR, nine in 10 will not be affected by it.
The government supports families in ways beyond providing tax reliefs, he added. Examples are the grants that are given out through the Baby Bonus Gift and Child Development Account First Step.
There are also measures to help parents balance work and life commitments, including extended parental leave.
Correction: An earlier version of this article incorrectly stated that 99 per cent of taxpayers are unaffected by the S$80,000 cap. It is instead tax-resident individuals who are not affected. The article above has been revised to reflect this.