Tuesday, February 26, 2013

Why Pay in the first place?

In this post, I have decided to address something personal instead of the usual socio-political and legal stuff.  But, I guess in a way the personal is political.

Amongst the sugary stuff that is being thrown at us peasants (so that the real details of government expenditure can continue to enjoy opacity) is a reduction in the levy payable for the employment of Foreign Domestic Workers in households that have young children or elderly dependants.  I have a young child and an elderly dependant.  I am currently paying $170 for the levy.  From 1st March 2013, this amount will be reduced to $120.  The Straits Times dutifully reports that this represents savings of $600 a year. 

Let's see... The street bully has been extorting $100 a month and now he has decided to take $50 a month.  I am supposed to be happy that I am enjoying a saving of $600 a year.  What I want to know is why has the street bully been extorting all along?

Why do we have a maid levy?  Originally, it was seen as a measure to discourage families from hiring domestic workers.  The levy system has not reduced the demand for nor the actual employment of foreign domestic workers.  It is a practical reality that many Singaporean families face.  Recognising that where both the husband and wife are working, hiring a caregiver is inevitable in situations where there are young children or elderly dependants, the government has had a system of lower levy payments of $170.  This $170 is being reduced to $120. 

But, why should an employer be made to pay a levy to the state under circumstances where the employer is trying to raise children?  Shouldn't we be incentivised?  By imposing a levy, the state is adding to the financial burdens that a couple faces when raising children.  Similarly, where we seek to look after our elderly in our own homes and employ a domestic worker for this purpose, we are being penalised by the state.  Under the new system, the levy payable in a year is $1440.  The net effect of this system is that we are being (and we have been) taxed for providing for the care of our children and the elderly. 

Quite apart from the fact that the state is generating revenue out of concerned families that seek to cater for elderly parents and young children, the payment of a levy for all domestic workers is itself questionable.  If the idea is to make it costly for employers to employ a domestic worker and thereby to discourage such employment, then instead of the state turning this into a revenue generating exercise, a minimum wage for domestic workers could be implemented.  I'd rather pay the amount represented by the levy to my helper instead of to the state.  So, instead of paying for example $450 to the domestic worker and $265 (or $170)for the levy, I'd prefer to pay $715 directly to her. 

With minimum salary requirements already in place for domestic workers, there is no harm in absorbing the levy payment as part of the minimum wage.  I believe that, moving forward, we should scrap the levy system and institute a minimum wage for domestic workers. 

My mother-in-law had a fall last year and the resulting fracture saw her being hospitalised for about a month and being moved to a nursing home for step down care.  She has been at the nursing home for about 3 1/2 months and we just brought her back home.  The total nursing home charges have come up to $13,510.  This is inclusive of the GST charged.  The GST works out to be slightly more than $880.  Why am I paying this tax to the state?

One problem with the GST system is that the imposition of this tax is universal without regard to the nature of the goods and services being rendered.  Why do we need to pay a tax in relation the receiving medical services?  So that the state can continually generate revenue at the expense of citizens' misfortune?

I guess, in the end this is not exactly a personal rant.  The personal is political.