SINGAPORE, Feb. 25 (UPI) -- Hopes are riding high that the new budget to be announced Friday by Singapore Finance Minister and Deputy Prime Minister Lee Hsien Loong will have a host of financial incentives to revive Singaporeans' desire for making babies.
Last year, the country's birth rate fell to 37,600, an all time low since its independence and well below the 50,000 needed to sustain the population.
The ailing stork is posing policymakers a real headache.
Previous financial incentives (including tax breaks) have had little impact as the birth rate has continued to fall. Citizens have been arguing that such incentives are not enough and that the government needs to look at an overall policy, including childcare options, more flexible work environment and longer maternity leave.
Currently, there only a handful of childcare centers in the country that will take babies under the age of 18 months, there is no paternity leave and paid maternity leave is restricted to two months.
Generous tax incentives for mothers to have a second and third child are offered, however those incentives are narrowly targeted to working younger mothers (women below the age of 31 years old can claim additional tax relief if they have a second, third or fourth child) as well as educated working mother (depending on their level of education, mothers can claim additional tax relief as a percentage of their salaries, which mean that the higher the income the higher the tax relief).
These relief plans have been especially designed to encourage young women to have children and to encourage educated, higher income women to have children too. The government has also been trying to "engineer" romance amongst its citizens, officially supporting a match-making program and launching campaigns such as "Romancing Singapore" to put people in the mood.
This will probably be Lee's last budget as a finance minister. He has been anointed as the successor to Prime Minister Goh Chock Tong who is expected to announce a decision on the timing of his step-down within the next couple of months. As such, given the current preoccupation of Singaporeans, with many concerned about the lack of a strong economic recovery and the rise in unemployment, Lee's budget is expected to distribute some sweets. Indeed, the prime minister has already hinted it will be a baby friendly budget.
Many expect the basic child relief, which is currently a meagre US$1,200 per children to be increased. Tax rebate available only for second, third and fourth child could also be extended to the first child, and these rebates could also be extended to the husbands, so women do not have to return to work to benefit.
The Women's Wing of the dominating PAP political party has also put forward a list of 14 proposals on the issue, calling for mandatory paternity leave of eight weeks and maternity leave of up to six months, with the government picking up the tab in both cases.
However, too much should not be expected as Lee has also announced separately that a review committee would be set to work on a comprehensive plan to help the storks, which could take several months.
Moreover, the government has been running a budget deficit for the last 3 years and is also facing demand from the corporate sector for additional tax breaks to make the country more competitive.
Most economists anticipate another small budget deficit for this year, of about 1.5 percent of GDP, as the government is expected to cut corporate and top income tax rates by up to 2 percentage points.
The Singapore Manufacturers' Federation has called for the current corporate tax rate of 22 percent to be trimmed down now to the planned target rate of 20 percent, and would also like to see the personal income tax rate fall in line with the corporate tax rate.
The motor industry is also hoping for a tax cut, as the tax on cars is among the highest in the world, which would help lower car ownership costs.
