Saturday, 16 February 2013

National Defence tax for foreigners will hurt Singapore ultimately

By Kenneth Lim, The Business Times, 15 Feb 2013

A PROPOSAL to impose a "national defence duty" on permanent residents (PRs) and foreigners could just wreck Singapore's competitiveness.

And it would be seen as populist, short-sighted, even xenophobic.

Member of Parliament Hri Kumar Nair on Wednesday suggested an additional tax on PRs and foreigners to "create sharper distinctions between Singaporeans and others who live or do business here" and to address an "imbalance" in terms of the national service obligations of Singaporean males.

A tax on PRs and foreigners accomplishes neither of those goals in a sound manner.

Let's look at the first objective, that of sharpening the distinction between Singaporeans and non-Singaporeans. The ultimate goal - a laudable one - is presumably to improve the relative value of citizenship. When we talk about comparisons, there are generally two ways to increase the distinction between the objects being compared. If you want to increase the distance between your left hand and your right hand, you can move your left hand farther to the left, or you can move your right hand farther to the right. So, if we want to increase the relative value of citizenship, we can do two things: (1) Improve the value of citizenship; or (2) Decrease the value of PR and foreigner status.

A defence duty will widen the citizen-foreigner gap by the second method, which is the wrong-headed way to accomplish that goal.

If it isn't already apparent why, here's an analogy. Let's say a country club has two membership tiers. Full members get sheltered parking. Partial members, who are a significant source of revenue and eventually get full membership for the club, must park in the sun.

If you want to sharpen the distinction between full and partial members, you could add valet parking for full members, or you could hang floorless birdcages full of incontinent pigeons over the partial members' parking lot.

Taking the latter route is irrational because it may have a broader effect of devaluing the entire country club, not to mention shutting off a potential source of renewal and revenue for the club.

The same will happen to Singapore if we pursue a policy that in effect punishes people for wanting to live here. Essentially, such a policy sends a message: We want you to become a citizen, so we will treat you worse.

Proponents of the policy might argue that, well, it is okay to reduce the attractiveness of Singapore because we do not really want foreigners anyway.

Aside from the fact that such an argument may appear xenophobic, there is absolutely no cost in keeping Singapore attractive for as many people as possible who want to live here, because we already have the means to limit who actually gets to stay. We simply say no at the door.

But pursuing a policy that will reduce the pool of applicants will hurt the country when we have to say yes. If citizen birth rates continue to fall, for example, the country will have to turn to immigration for renewal. Wouldn't it be better to have more people to choose from if we encounter that scenario?

What about the argument that the defence duty would correct an "imbalance" in terms of the time put in by citizens who do national service? The problem with this line of thinking is that it ignores the fact that male permanent residents who meet the age requirements already face a penalty for not meeting their national service obligations. If they choose not to serve, they lose their residency status and the chance to become a full citizen.

How is that not equitable? The same way that we do not expect other countries to conscript us when we are visiting or working in those countries, we should not expect others to serve in our armed forces if they are not committed residents.

And if you feel that the loss of permanent residency and the eventual hope of Singapore citizenship isn't worth enough, then make it worth more.

Make those who lose that chance weep for their lost dreams and opportunities, so that they will tell their children and their children's children, if you ever have the chance to be a Singaporean, don't ever give it up like me.

Don't impose a punitive measure that will make them tell all who will listen, don't even bother.

The national defence duty is the latest escalation in the ongoing debate about population and immigration. It is tempting and easy to target immigration and immigrants because they do not vote.

Our politicians must not feed that beast. Because the truth is that Singapore was built on the backs of immigrants, and immigration will always be an integral part of our national story.

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