It is estimated that the number of people aged over 65 will surpass the number of youths aged under 15 due to the decrease in births in many states by 2050. Although tax burden on the younger generation and a labour shortage may be caused by this trend, the encouragement of people to have more children could be a solution to these concerns.
Most taxes are drawn from people who have incomes; people who receive wages, salaries, commissions, service fees, etc. However, most workers retire when their age reaches 60. This means that more people will be retiring and fewer people will be working and paying income tax. Furthermore, the income tax may have to be raised in order to compensate the deficit; this is likely to exacerbate the financial burden for workers. Therefore, the consequence of an ageing society could be far-reaching.
To mitigate the ageing society problems, the government could offer incentives for couples to have children; the incentives include the subsidization of children’s insurance and education fees. For example, the Singapore government has a tax discount of around 25% for families that have at least 2 children; which will increase to 30% and 35% for the third and fourth child, respectively. As a result, the new generation of population will help the certain state balance the demographic of working age.
To conclude, if families in ageing societies are encouraged to have children, the volume of new taxpayers in the future will be created to balance.