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.


Anonymous said...

The maid levy is not a tax but a pricing mechanism to control the number of maids. But I agree with you, I would rather pay the levy to the maid than to the government.

GST is universally applied to all goods and services. In Europe certain classes of goods and services are zero-rated for VAT. A case can be made for similar zero-rated GST for say, basic foodstuffs, hospital bills and other other essential stuff that will benefit the lower classes and lower the cost of living.

Anonymous said...

Holy crap, $13,510 for nursing home bill? That's almost my 1 year salary. And the hospital bill will be another $5K at least?!?

Damn, I better get my PR in M'sia, Indo and Thailand approved asap. So when I reach 60 I will sell my HDB and take out all my CPF to go retire to some country town and grow my own vegetables and chickens. Dream of the bottom 40%.

sgthinker said...

You said "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."

In some other developed countries (notably the Nordic states that many netizens hope to copy), this is not true. Couples in those states don't often need a personal maid even if the couple is working. Group childcare and eldercare plays this role.

So let us re-examine the assumption that "Got kid and elderly = need maid". If everyone thought like that, we're never going to be less reliant on large numbers of foreign labour.

Anonymous said...

$12,630 for a 3.5months stay in a nursing home???!!!
Immoral businessman really know how to profiteer from the plight of sporeans!!!

Anonymous said...

Granted that their existence may not go well with all, supposed the decision to implement them was a cold calculation of overall cost and benefit then, which all public policy implementations are said to be based on.

My two cents worth of opinion here is why are all policies made without an expiry date? The easiest excuse given for the continuation of any policy is that it is already there. Wrong, I think there should be an expiry date and a debate should be raised to justify why it should still be so or an alternative or none is better. That would be one sure way to ensure cost eating budget sacred cows are not there for eternity.

Secondly, why are we not creative with these devices? For example, we can give GST rebate to companies to take back and dispose off waste, unused or obsolete parts and materials in an environmentally safe manner to instill an environmentally friendly and sustainable consumption culture that is unique in the world.

Why are our policy makers to willing to exercise creativity and innovation with the tools they have created?

Anonymous said...

Let me guess, it's a subsidized nursing home, perhaps owned by NTUC or Temasek.

Subra said...

I think I should clarify the nursing home charges.

Nursing homes in Singapore are either classified as private nursing homes or voluntary welfare organisations. Secondly, there is also the issue of MOH subsidy which is given on the basis of a means test that is administered.

The waiting time for the VWO nursing homes and generally for those coming under the MOH subsidy can be as long as 6 months to 1 year. In cases such as that of my mother-in-law (hospitalisation due to fracture), there is a need for 'step-down' medical care though there was no need for continued hospitalisation. She was in the hospital for 3 weeks and the doctors recommended that it is best that she is transferred to a nursing home (from the perspective of costs as well the risk of infections). The VWOs were not a option because of the waiting time. Applying for the subsidised rates was a possibility as at that time, my wife was not working and based on the per capita income we would have just made it into the scheme. But, we were advised as to the processing time and waiting time for a place.

We were given the clear indication that it was prudent to go for a private nursing home. That is waht we did in the end. It was a choice of her remaining in the hospital until such time that she could be discharged or transferring her to a private nursing home where the charges would still be lower than the hospital.

The basic care charges came up to $2,300 a month. Most private nursing homes are in the $2,000 to 2,500 range for the monthly charges. Over and above the monthly care charges, you would have to fork out additional payments for 'consumables' which is a variable figure.
This, as it turns out, is common in nursing homes generally. In a month, I ended up forking out more than $1,000 for this.

I managed the situation. But, I wonder how most of my fellow Singaporeans would cope. The least that the state can do is to get rid of GST for this category of services.

Anonymous said...

What if ... Everyone decided not to pay the levy? What are the legal implications? If a law is stupid, do we continue to be sheeple?

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