Jamus Lim: Environmental tax issue raised in context of SIA's 'flight to nowhere'

Workers' Party Member of Parliament (MP) Jamus Lim on Oct. 5 filed a question on environmental tax for the Minister for Transport Ong Ye Kung to answer in Parliament.

To further clarify why he posed that question, Lim wrote two Facebook posts subsequently to share his thinking on the matter.

In context of "Flight to Nowhere" initiative

Lim said on Oct. 6 that he filed the parliamentary question in the context of Singapore Airlines' (SIA) "Flight to Nowhere", back then when it was still unannounced if SIA will be launching the initiative.

"We are required to file PQs in advance, and the issue was still pertinent at the time of filing. But more generally, it is worth noting that the idea of recognizing who bears the burden of a tax—the general taxpayer via bailout funds, or a specific segment of society willing to pay for the privilege of a flight while indirectly supporting SIA—is still relevant, regardless of the plan."

Still a relevant issue to discuss

While SIA confirmed that it will not launch the 'Flight to Nowhere' on Sep. 29, Lim finds that it is still relevant to discuss who bears the burden of environmental tax.

This is because "green businesses are the businesses of the future" and caring for the environment "need not come at the expense of jobs and profits", he added in his second Facebook post on the matter.

Therefore, he is "disappointed" that there was no thoughtful debate on this matter as his question has been "misrepresented as a misguided agenda to roll out additional taxes on an ailing industry".

What happened?

In response to Lim's question, Ong said that environmental tax has been discussed in the international aviation community and can be considered if there is no Covid-19 pandemic.

Ong said implementing an environmental tax will make the situation worse for SIA during this period.

Here's the transcript:

Jamus Lim: I'm just wondering if he'd be able to clarify the thinking behind why in his statement he mentioned that he would not consider an environmental tax because it would impose a clear cost on economic viability of SIA. I mention this because the burden of the tax either falls on the consumers or the producer depending, in large part, on the intensity with which the demand or supply responds to price, what economists call "elasticity". So it's entirely possible it does not impose an immediate concern on the economic viability if SIA is able to pass on the cost.

The second question is, I wonder whether it is possible to consider mechanisms where the environmental needs of both the country and the world need not be a casualty to business considerations. And by which I mean we can think of innovative ways, for example, if you have a "Flight to Nowhere" of course as you mentioned a moot point, it could well be the case that this tax can be funded by savings on berthing rights and hence ultimately the costs of tickets need not actually rise.

Ong Ye Kung: I think all these considerations can be done if there had been no Covid. There has been some discussion in ICAO, in the EU, in the international community. But I think the simple answer is this, we are in a crisis.

SIA is faring 1.5 per cent of its passenger volume so it's not about passing the cost to passengers, is that there's no passenger to pass to now. SIA is whatever it can to preserve cash, because if you understand how a company runs, when a company runs out of cash, it is insolvent, it goes under. And SIA would have gone under if not for the massive recapitalisation exercise that happened and therefore we need to help SIA preserve as much cash as it can. It.. itself is trying to generate as much revenue as it can.

This is really not the time now to talk about an environmental tax on SIA. If I were to do that, I think there's a Chinese saying "落井下石". I would have made the situation much worse for SIA, it means someone fell into the well you throw a stone to make the situation worse. So let's be very careful about that. When things resume, the international conversation will go on whether there should be an environmental tax.

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Top image via CNA Parliament video and via Ong Ye Kung/Facebook

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Jamus Lim: Environmental tax issue raised in context of SIA's 'flight to nowhere'

Events

In context of "Flight to Nowhere" initiative

Still a relevant issue to discuss

What happened?

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