Law and Home Affairs Minister K Shanmugam backed his ruling party colleague, Transport Minister Ong Ye Kung, and criticised Workers’ Party (WP) MP Jamus Lim’s suggestion that the Government consider imposing a per-flight environment tax on Singapore Airlines (SIA) if it goes ahead with its flight-to-nowhere plans.
Dr Lim made the suggestion through a parliamentary question he posed to Mr Ong when Parliament convened this week. Mr Ong answered Dr Lim’s question in a ministerial statement he delivered on the path forward for the aviation industry, which has been hit hard by the COVID-19 pandemic.
Revealing that SIA has decided to scrap its flight-to-nowhere idea, Mr Ong asserted: “…what I will not contemplate is to impose on them an environment tax at this time, as Assoc Prof Jamus Lim indicated in his question because that will just worsen the crisis for SIA.”
Dr Lim, an economist, sought clarification in a follow-up question and explained that the tax could be borne by the service producer or the consumer.
Pointing out that the environment tax could still be economically viable for SIA if it is able to pass the cost on to consumers, Dr Lim asked if more creative ways can be considered so that environmental needs “need not be a casualty” to business considerations.
Mr Ong sharply responded that this isn’t the time to consider an environment tax given the COVID-19 pandemic and the dire situation the national carrier is in. Asserting that it is not so easy to pass the cost on to customers since there are practically no customers at this time, he said:
“The simple answer is this, we are in a crisis…SIA, as I mentioned, is ferrying 1.5 per cent of its passenger volume so it’s not about passing the cost to passengers – there are no passengers to pass (the tax) to now.”
Sharing that the Government needs to “help SIA preserve as much cash as it can” since the national carrier is in such a precarious state that it would have gone under if not for its recent recapitalisation exercise, the minister said:
“So, this is really not the time now to talk about an environmental tax on SIA. If I were to do that…I would have made the situation much worse for SIA.”
Using a Chinese idiom, “落井下石”, to illustrate how imposing such a tax on SIA at this time would be akin to hurling stones at someone who has fallen into a well, Mr Ong added: “So let’s be very careful about that. When things resume, the international conversation will go on (as to) whether there should be an environment tax.”
Referring to the exchange in a Facebook post later that evening, Dr Lim said that an environment tax is a way to help support SIA preserve jobs without incurring unnecessary long-term costs on the environment.
Dr Lim pointed out how an environment tax could constitute an indirect transfer from typically wealthier customers who would take flights-to-nowhere to SIA workers and compared this to a bailout, as is currently the case, which is funded by general taxpayer monies. He also said that the tax could be borne by the airline by cutting certain costs like berthing rights in foreign airports since planes wouldn’t need to land overseas.
Sharing that these trade offs are important to consider and that it is good to recognise who bears the burden of a tax when netizens asked him why he is bringing this issue up when SIA has scrapped the flight-to-nowhere plans, Dr Lim said:
“More generally, I was hoping to spur some creative thinking about how we can help ensure the future viability of our national airline, without compromising the need to pay attention to the environment, too. I think such creative thinking is necessary to ensure that we don’t spend our hard-earned reserves in an unwise fashion.”
Meanwhile, prominent Cabinet minister and one of the longest serving ruling party MPs, Mr Shanmugam, has shared his own views on the matter and backed Mr Ong’s decision that imposing an environment tax at this time is not the right call.
Sharing a video of the exchange between Dr Lim and Mr Ong, he wrote on Facebook: “Dr Jamus Lim wants a tax on SIA and Min Ong explains why that is not a great idea right now, when SIA staff jobs are at stake.”
Mr Shanmugam’s criticism of Dr Lim’s suggestion comes in the same week that one of his ministries, the Ministry for Home Affairs, invited the opposition politician to declare whether he supports or opposes the death penalty after he filed a parliamentary question on whether capital punishment is an effective deterrent.
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