Child benefits that pay the higher-income more cause inequality?

singapore-education-system

Child benefits should not pay higher-income families more than the lower-income?  

I refer to the article “Levelling the educational playing field in Singapore” (Straits Times, May 27).

It states that “RI principal Frederick Yeo is encouraged that the chatty, articulate boy is one of several students who, despite coming from a low-income household, made it to RI. But even he admits the numbers are falling.

… stressed how it must not be “difficult or impossible for others with talent or ability, but lacking the right backgrounds and connections” to be welcomed into elite groups and rise to the top.

RI has become less diverse. Just about half of current RI students live in public housing (compared to 80 per cent of Singaporeans who live in public flats).

RI declined to give figures on how many of them live in three-room Housing Board flats or qualify for 100 per cent financial assistance.

Mr Yeo will only say it is “a very small minority”, despite outreach efforts. For the last eight years, RI has been giving cash awards of $1,000 to primary school children from low-income homes to encourage them to aim for a place in the school.

Not satisfied with the 20 to 30 pupils receiving the award every year, RI tweaked the scheme to give out the awards a year earlier to Primary 5 pupils, and even got its students to act as mentors.

RI also held more visits and tea sessions for primary school teachers to learn about the financial and emotional support it provides.

The school was able to double the number of award recipients. Still just one or two of the recipients eventually enrol in RI.

As to “Some of the teachers and school leaders tell us that there are some who worry about other costs. In some cases, the parents worry that the children will not fit in with their peers,” said Mr Yeo” – arguably, the root cause of lower-income children not attending the top schools may be the financial situation of the parents. Also, some of our procreation policies may be elitist.

For example, according to the article “More than S$8.3b disbursed in tax rebates to encourage procreation” (Channel NewsAsia, Jan 20, 2013) – “The government last year gave out more than S$8.3 billion in tax rebates and reliefs aimed at encouraging procreation in the Year of Assessment 2012.

The Inland Revenue Authority of Singapore also told Channel NewsAsia that more than 850,000 working mums and dads enjoyed such tax breaks in 2012.”
Lower-income don’t get tax benefits?

What this means is that those who do not earn enough to pay any or very little income tax, do not benefit from the procreation tax benefits.

For the rich, the higher the income and tax rate, the greater the procreation tax benefits.

Procreation incentives favour the higher-income?

There are too many procreation incentives that discriminate against lower-income Singaporeans, like the parenthood tax rebate, working mother’s child relief, qualifying child relief and the Child Development Account (“CDA: 1 to 42% subscribed – discriminates poorer families?“, May 25).

How many don’t get tax benefits?

As to “more than 850,000 working mums and dads enjoyed such tax breaks in 2012″, how many working mums and dads did not enjoy any or very little tax breaks?

In this connection, according to the Inland Authority of Singapore’s (IRAS) Tax Calculator, Singaporeans who are married mothers earning less than $3,000 a month, generally do not have to pay any income tax, after the deductions of their employee CPF contribution and personal reliefs.

Same benefits regardless of income?

Why not just give the same benefits to parents, regardless of their income or financial ability to contribute to the CDA? After all, I understand that about 50 per cent of Singaporeans do not or hardly pay any income tax.

We need to spend more, and more equitably, to help Singaporeans to reduce inequality, regardless of their economic status.

Leong Sze Hian

About the Author

Leong
Leong Sze Hian has served as president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), invited to speak more than 200 times in over 30 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of Indonesia and Brunei. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.