Thu, Jan 16, 2020 - Page 8 News List

Expand the child benefit program

By Lee Po-Chih 李博志

In a bid to boost the nation’s low birthrate, then-premier William Lai (賴清德) announced at a media event on May 16, 2018, that the government would provide a monthly allowance of NT$2,500 (US$83.47) for households for each of their first two children up to the age of four, and an additional NT$1,000 for a third child.

This program was implemented in August last year, but Taiwan’s birthrate continues to decline, while the rate of deaths is increasing.

The National Development Council said that Taiwan is, at the current pace, likely to reach a negative growth rate by 2022, faster than the World Population Review’s forecast of 2031.

Taiwan has been an aged society since April 2018, as more than 14 percent of the nation’s total population is older than 65.

An aging population combined with a low and declining birthrate constitutes a national security problem, because economic growth is not sustainable with an inadequate workforce.

At a campaign event in Taitung on Nov. 22 last year, President Tsai Ing-wen (蔡英文) promised to increase the monthly allowance from NT$2,500 to NT$5,000, and also to extend the coverage from four-year-olds to six-year-olds, indicating that the new measure had been unable to increase the birthrate.

To effectively increase the birthrate and tackle child poverty, the government must substantially expand the existing program. The child benefit must be a tax-free monthly payment to eligible households to help them with the cost of raising children up to age 14, rather than to age six.

The age of 15 is the threshold for labor force participation in Taiwan, which means that children aged 15 can start to work to support themselves.

Therefore, the benefit per child must be expanded from four years old to 14, which would provide enough incentive for families to increase the birthrate.

The Report on the Survey of Family Income and Expenditure 2019 said that the average annual disposable income for the lowest 20 percent of the nation’s population, about 1,728,628 households, was NT$344,948 in 2018, less than their expenditures of NT$363,158, implying negative annual savings of NT$18,210 per household.

Negative savings have existed since 2007 for the lowest 20 percent of households, suggesting that these households will have, for a long time, insufficient resources to raise their children.

Therefore, the child benefit must be targeted to those who need it most. Low and middle-income households should get higher payments, those with higher incomes less, and the highest income groups should not be subsidized.

Following Tsai’s re-election, the proposed monthly allowance increase should be implemented.

The basic child benefit for children younger than seven should be NT$5,000, and for children aged seven to 14 it should be NT$4,200, with a larger benefit per child younger than seven.

As the child benefit must focus on low and middle-income households, for those with an annual income of less than NT$385,000, the amount should be NT$5,000 per month or NT$60,000 annually for children up to the age of six, and NT$4,200 per month or NT$50,400 annually for children aged seven to 14.

For example, a single mother of two children, aged five and seven, with an income under NT$385,000 this year would have received NT$110,400 in child benefit payments.

For households with an annual income between NT$385,000 and NT$833,850, the child benefit should be reduced based on progressive rates and number of children.

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