MINISTER of State for Finance Josephine Teo yesterday addressed an MP's worry that families with only one working spouse receive less in tax relief than those in which both worked.
She said the help they receive has to be viewed in terms of all the various types of help available rather than just tax relief. For instance, the baby bonus is the same, regardless of whether a mother works.
"On the total package basis, such help extended to families with stay-at-home mothers is much larger than the tax benefit of spouse relief," she said during the debate on the Income Tax Amendment Bill, which was passed by Parliament yesterday.
Mrs Teo was replying to Ms Low Yen Ling (Chua Chu Kang GRC), who said that "stay-at- home mums do not receive any tangible relief for the income loss they suffer as a result of stopping work to care for their children".
A single-income family could pay more in taxes than a dual-income family making the same amount of money, Ms Low said, as she asked for the spouse dependency tax relief to be raised from $2,000 to $5,000.
She also wants the income cap to be raised to provide greater tax relief to husbands of stay-at- home mothers with children under 18 years old. Currently, only individuals who are supporting spouses who earn not more than $4,000 a year are eligible for the spouse dependency tax relief.
Replying, Mrs Teo said it was unlikely the single income would be as high as the two incomes combined before the spouse stopped working. Rather, it is more likely that there would be a loss of total income which even more tax relief would not make up for, hence it was better to take a holistic approach to supporting families.
The Bill also provided for the raising of the cash conversion under the Productivity and Innovation Credit from 30 per cent to 60 per cent, with a $100,000 cap, and a one-off cash grant of up to $5,000 to SMEs.
Ms Low asked for the $100,000 cap to be lifted, to spur more R&D spending, but Mrs Teo said that the cap had not constrained companies as most had not exceeded the limit.