Sunday, September 26, 2010

Fairness to all - Singaporeans and Foreigners

The massive influx of foreigners into Singapore in recent years has become the hottest issue in the coming General Election. The anti-foreigner hate comments on internet forums have alarmed even a pro-Singaporean reader like me (true blue native Singaporean who has completed 2.5 years of NS).

Foreigners make up 36% of the Singapore population. This figure excludes the group of foreigners who converted to become new citizens. It does Singaporeans no good to be anti so large a group within the country. The economic force the foreigners wield is much greater than the figure 36.4% suggests. Based on my working experience, foreigners probably make up close to or even more than 50% of the Singapore working population. The citizens group includes a significant number of non-working people like the old retirees and young ones who have not started working. Since most foreigners come here primarily to work, it is quite possible that foreigners make up more than 50% of our workforce. Let us be practical. Given their large numbers, we have to learn to live with them. While it is sad to live in a country that requires its locals to adapt to foreigners, if hard reality requires one to do so, then we have to do so.

In my line of work as an engineer, I had no choice as a minority but to adapt to the ways of my foreign colleagues. In fact, it was a matter of survival because several of my bosses (and my bosses' bosses) are foreigners. Whose bread I eat, his song I sing.

I can get along with almost all of them except the exceptional few who have an irritating habit of comparing my country with theirs (one of the fastest growing economies in the world) in a bad light. It was a lesson in humility. I have reminded myself not to do the same thing in my interaction with foreigners who come from a more backward country.

Issues of unfairness must be resolved before the social tensions between native Singaporeans and the others (Foreigners, Permanent Residents and New Citizens) can be eased. Social integration programmes cannot work effectively as long as these issues are simmering underneath. These are issues that anger even fair-minded, reasonable Singaporeans. What more for the more emotional, irrational group of Singaporeans who mainly lost out due to the influx of foreigners.

The issues that cause fair-minded, reasonable Singaporeans to feel indignant are National Service, free education and allowance to foreigners in our universities, highly subsidized education to foreigners and not enough differentiation in terms of benefits between PRs and citizens. The worst are policies that put Singaporeans at a disadvantage against the foreigners.

Instead of simply complaining, I would like to make some suggestions.

There is no level playing ground in the job market between native Singaporeans burdened with conscription liabilities and foreigners who are not. No employer like to have their worker go missing in action for a few weeks (max 40 days) every year even for a good reason like duty to the country . Although this is not a serious problem in large companies or the civil service, it can cause major disruptions in small companies of 5 to 10 people. It is very hard to find temporary replacements for small companies. There are other potential liabilities like the unfit Singaporean who has to leave work early regularly to attend remedial training. Let us be honest with ourselves. If you were an entrepreneur just starting out a new business, given all things being equal, would you prefer to hire a Singaporean or foreigner?

It is not fair to have foreigners benefit from the umbrella protection native Singaporeans provide while at the same time enjoy an advantage in the job market from the very sacrifice Singaporeans made to benefit all. To be fair, there has to be some sharing of the cost of National Security.

I propose to have higher taxes imposed on those who did not do NS but benefited from those who did.

If higher taxes, then what form of taxes? To be fair to the foreigners, higher income taxes should not be the target because they also contribute to the country's economy when they work here. Higher taxes should be imposed when they become property owners because it is then that they benefit from the security NSmen provide. The higher taxes must be meaningful enough to make an impact.

The higher property tax revenue collected can be used to compensate employers who have to put up with the inconveniences of NS liabilities. When workers take leave from work on reservist duties, companies should be compensated the salary of the worker + an extra X amount to compensate for the inconveniences caused. The smaller the company, the larger the X amount because of the greater inconvenience. This partially transfers the cost of NS liabilities from native Singaporeans to those who enjoyed the security provided by us. This will result in lesser discrimination in the job market against native Singaporeans.

I hope the government to at least consider the proposed taxes because of the following reasons;
  • Political benefits to ruling party in an election year
In an election year, it makes political sense to right an unfairness to the native citizens who carry a large number of votes by taxing foreigners with no votes. While new citizens may not like the higher taxes, they are still smaller in numbers compared to the natives. Besides, I do think reasonable new citizens would not object vehemently to pay the protection money.

  • Easy to sell to foreigners, PRs and new citizens
The higher taxes are much easier to sell to the new citizens, PRs, foreigners than to persuade native Singaporeans to bear with the status quo. Historically, foreign mercenaries are hired to risk their lives to fight wars to protect the assets of the locals. Singapore has created an unprecedented case in history by doing the opposite. The locals are expected to risk their lives in the event of war to protect the assets of a significant portion of foreigners (mercenaries who come here to make money) or new citizens in the population. For a sacrifice as great as risking one's lives, one would expect to get paid handsomely. Hence, asking for protection money is not unreasonable.

  • Make money and please voters
Higher taxes for a targeted group would be preferable than giving NSmen money gifts  The cost of money gifts from the government will be paid by all taxpayers which include NSmen. To make matters worse, giving away money can lead to further unhappiness if the distribution of the money gifts is perceived to be unfair. Indeed, the older generation of NSmen who obviously had a harder time than the younger generation had good reasons to grumble on receiving lesser or NO money at all in the recently announced hongbao package. More importantly, giving away money diminishes our money reserves while taxing the right people raises our reserve cushion. If both approaches achieves the desired result of fairness to all, the approach which makes money would be much more preferred.

  • Vital to national security to have enough soldiers with high morale
While the influx of foreigners can grow GDP, no country can rely on them to fight wars. Foreigners come here to make money and extract maximum benefits from the host country. Once they smell trouble, they will be the first to leave the host country. If our soldiers feel that their very sacrifice to defend the country put them at a disadvantage in their own country, the perceived unfairness will lead to low morale. Soldiers with low morale cannot win battles. Read the Moral Law in Sun Tzu's Art of War.

Singaporeans have heard anecdotal stories about their friends or friends' friends emigrating out of the country. Based on personal experience, I think the numbers are quite significant. One often cited reason is the unfair burden that NS imposed on the native Singaporean citizens. By correcting this unfairness, we can at least stem the tide and retain enough soldiers for the defense of the country.

  • Current low taxes give us leeway to raise more
Singapore is known for having a low-tax regime. The attractive low tax rates currently give us room to raise taxes on the foreigners without driving them away.

  • Ease social tensions
All issues of unfairness must be resolved before the communities can start accepting one another. This is vital for social integration of the foreigners to be effective.

5 comments:

  1. I am disappointed at your suggestion of encouraging this utterly greedy govt. to impose another kind of tax (although it is on foreigners). They must be very happy to hear of this kind of suggestion. You can rest assured that more tax means even higher revenue. This will offer them good reason to further increase their obscenely high salaries!

    Income tax in S'pore is low when compared to some 1st world countries. You should also bear in mind that all kinds of benefit given to citizens of those countries are not exist in S'pore. What do S'poreans get from the govt. when they are out of job? When they are seriously ill? When they are old and poor? When they are orphaned? etc.

    Income tax in S'pore is indisputably low comparatively. You have totally forgotten the many other taxes in gigantic amounts that S'pore citizens have to pay. The PAP trick is that they do not call them "TAX". They are given different names. All S'poreans know what they are. Whereas, there is no such taxes found in those other countries! If you total up ALL the taxes paid by a S'porean and compare that of an Australian, a New Zealander, a British, etc., you will be shocked to see how much MORE a S'porean has been paying for the last 25 years or so and how much MORE in a lifetime.

    On the other hand, why not compare with those countries like Brunei, Saudi Arabia, (I heard China too) where there is no such thing as INCOME TAX! Yet, citizens' welfare is taken care of.

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    1. At least the author's article has had the benefit of some thought. Which cannot be said of your diatribe.

      Compare ourselves to Brunei and Saudi Arabia? Yes, when you can go to your backyard, dig a hole and money comes gushing out. Also, would you prefer to live in these 2 countries? Your welfare would be very well taken of there. China - no income taxes? You "heard"? Why don't you do some research and analysis first?

      And really, Singaporeans pay a lot more taxes than Aussies, New Zealanders and the English? Instead of spouting nonsense, can you please back it up with some real figures? Let me start you off with some figures first. Components of the taxes in England include 50% max tax rate on income, another 10% or so of your income for National Insurance, and 20% VAT. And these are not all.

      These are compulsory taxes. You might complain about the COE and import tax. But you DON'T have to buy a car. Also, if the Government scrapped the COE and the import tax to make cars cheaper, you will have another thing to complain about. The Bangkok and Beijing style massive traffic jams.

      You keep on asking about what Singaporeans get from the government. "When they are out of job? When they are seriously ill? When they are old and poor? When they are orphaned?" Seriously? You are advocating a welfare state? You have been living underneath a coconut husk and have not seen what has happened in Greece, Spain, Portugal, Ireland? Why don't you ask about what YOU have done for the country? Serving NS is fine. But it doesn't buy you a lifetime of freebies from the State. And let's face it. NS is not exactly like that in Israel. Where you face real people really trying to kill you.

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  2. Replies
    1. Your response, you mean?

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  3. Very good suggestions,PAP should seriously consider them.

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