Change nonsensical tax policy

PUBLISHED : Friday, 24 February, 1995, 12:00am
UPDATED : Friday, 24 February, 1995, 12:00am

AS is often the case here in Hong Kong, it appears that the Government is working at cross purposes. In this case the problem is adoptions of unwanted Hong Kong children.

The South China Morning Post reported on February 18, that only 15 per cent of the so-called 'special needs' children available for adoption in Hong Kong were being adopted by local Chinese families. According to the Social Welfare Department, some of these children have actually been waiting for as long as five years to be placed with a family.

Yet while the Government is supposedly trying to encourage local people to adopt these unfortunate Hong Kong children, its own Inland Revenue Department rules bar would-be parents from claiming a child allowance for the six months of foster care which the Social Welfare Department requires before any adoption can be approved.

On the one hand, prospective adoptive parents are being told that if they want to adopt one of these so-called 'special needs' cases children - who are likely to need special care and attention, possibly medical attention - they will have to care for the child, providing food, clothes, child-care assistance and routine medical care (as with any child), for a full six months before they can have the adoption finalised.

On the other hand, they are being told that they cannot expect the tax relief afforded to all other territory parents who are doing the exact same thing for their children. Yet adopting these children is a government goal. Worse yet, current tax policy doesn't even make financial sense.

As long as the children are in the care of the Social Welfare Department, they are actually costing the taxpayer a sum substantially greater than any potential tax loss which extension of the allowance provision might entail, for until adopted they must be cared for in institutions like Po Leung Kuk, at the taxpayer's expense.

In the US (hardly a paradigm of a caring, progressive society these days), foster care parents - and this six-month 'trial' period is simply a kind of temporary foster care - are actually given some financial assistance by the state, and are also allowed to claim a child-care tax deduction for their charge.

The least Hong Kong can do is eliminate the financial burden caused by taxing those few parents who do have it in their hearts to adopt a 'special needs' child. All that is needed is for the Inland Revenue to let them claim that child as an allowance during the six-month foster care period. Such a change in policy might encourage a few parents of less substantial means, who otherwise could feel they could not afford the extra costs of caring for another child, to consider adopting.

After all, adoptive parents have the right to claim an allowance for their child once the adoption is finalised by the courts. The only difference between the situation in the first six months and the later period is a court order.

Does this contradiction between adoption and tax policy make social or even economic sense? DAVE LINDORFF New Territories