MANY MUMS STILL BENEFIT
Even with the new cap, nine in 10 women can continue to claim the WMCR fully.
There are 15 personal income tax reliefs in the current tax system for eligible individuals. They include reliefs for course fees, CPF cash top- ups, earned income and for those who care for parents, grandparents, disabled family members, and who save for their own retirement.
The most substantial relief is the WMCR, which aims to encourage married women to remain in the workforce after having children. To be eligible for WMCR, the working mother can be married, divorced or widowed. It is calculated on the child order and pegged to the working mother’s earned income (see infographic).
Under the WMCR, working mothers can claim up to $50,000 per child in total child reliefs. The WMCR is tiered: 15 per cent of earned income for the first child, 20 per cent for the second and 25 per cent for the third and up. The cumulative WMCR for all children is capped at 100 per cent of the mother’s earned income. This infographic shows you how the WMCR has evoled:
PROGRESSIVE TAX SYSTEM
Finance Minister Heng Swee Keat had said that while this cap would make Singapore’s personal income tax system “more progressive”, the personal income tax burden remains low.
Wu Soo Mee, partner at Ernst & Young Solutions, believes that the new tax relief cap is a move in the right direction to make Singapore’s tax system more progressive. After all, in a progressive tax system, higher tax is collected from taxpayers who earn more and lower tax from taxpayers earning less.
This is not the case currently, she says. “The current WMCR is inconsistent with the Government’s aim to make the tax rate system a progressive one. WMCR increases with a working mother’s earned income as it is based on a percentage of her earned income up to a cap of $50,000 per child.”
She adds that there are other child-related cash subsidies and grants for parents such as the Baby Bonus, First Step grant and reduced Foreign Domestic Worker Levy Concession, as well as other work-life support measures such as extended maternity leave, paternity leave and child and infant care leave.
A version of this article first appeared in The Straits Times.