Mon, Apr 22, 2019 - Page 6 News List

EDITORIAL: Helping more afford long-term care

The Executive Yuan on Thursday approved a bill for an annual tax deduction of NT$120,000 (US$3,891) for each person in need of long-term care services. The draft could become law as early as next year, benefiting 290,000 taxpayers with family members who have physical or mental disabilities and require care or who need it themselves. However, is the amount sufficient and is the funding sustainable?

The changes proposed to Article 17 of the Income Tax Act (所得稅法) by the Ministry of Finance make taxpayers, spouses or other family members eligible for the deduction if they are deemed disabled by health authorities, although people in the top 20 percent income bracket and those whose basic income exceeds NT$6.7 million would not be eligible.

Long-term care matters because the population is rapidly aging and the birth rate remains low. Beginning with the Long-Term Care Services Act (長期照護服務法), which took effect June 2017, the government has improved the legal framework for long-term care, increased the number of care facilities and expanded funding for care. Subsidies are also offered to those who require caregivers, live at care facilities or subscribe to home care services.

Long-term care is expensive. According to various estimates, the average cost of long-term care is NT$30,000 to NT$70,000 per month, with people needing care services for an average of seven to 10 years.

Most people rely on personal savings, a pension, investments or the proceeds from selling a home to fund long-term care. Many face a heavy financial burden if they are not eligible for a government subsidy or tax deductions.

The high cost of care can significantly affect people’s quality of life, as many people take care of a loved one instead of hiring caregivers or sending them to an institution. The aging population and shrinking workforce only increase the burden on the younger generation. Without support from the government, how will they support retirees and those with disabilities?

The government forecast that the number of people with disabilities needing long-term care would reach 1 million by 2026, compared with nearly 800,000 this year.

The government gives people older than 70 a NT$132,000 tax exemption on their income tax return and a special NT$200,000 deduction if they are disabled or handicapped.

An annual NT$120,000 tax deduction for long-term care is relatively low. The state coffers should be able to afford it, as the deduction is part of the government’s Long-Term Care 2.0 initiative.

Nevertheless, adequate and stable funding for long-term care remains a thorny issue. The long-term care system is mainly funded with revenue from tobacco and alcohol taxes, as well as estate and gift taxes. Is this tax revenue sustainable?

While revenue from tobacco and alcohol taxes reached a record high last year after a NT$20 per pack tax increase on cigarettes, revenue from estate and gift taxes was the lowest since 2015 and down 38.64 percent from a year earlier.

The government seeks to make the Long-Term Care 2.0 initiative accessible to more people, but it must consider other options — such as long-term care insurance — as soon as possible to supplement its funding.

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