The Government will soon announce a new emissions-based
vehicle tax system.
It is expected to replace the decade-old green vehicle rebate
scheme, which expires at the end of the year.
But more than just handing out tax rebates to buyers of
environmentally friendlier cars, the new scheme will take a
carrot-and-stick approach.
Buyers of fuel-efficient new cars stand to enjoy rebates of up
to $15,000, which they can use to offset their vehicles’ Additional
Registration Fee (ARF), the main car tax here. Those who go for
more pollutive models may have to pay up to $15,000 in extra
taxes.
The scheme follows closely the practice in the European Union,
where cars are categorised by the amount of carbon dioxide (CO2)
they produce, and taxed accordingly.
According to sources, a new car that produces less than 150g of
CO2 per km will be eligible for a tax break of up to $15,000, while
a model that produces more than 200g will be penalised by up to the
same amount.
The majority of cars sold here today fall within the so-called
neutral range of 150g-200g/km, which attracts neither incentive nor
penalty.
Big luxury cars or sports cars – such as the BMW 760Li,
Mercedes-Benz S600L, Porsche 911, Ferrari 458 and Lamborghini
Gallardo – are expected to attract higher penalties under the new
scheme.
And cars such as the Toyota Prius (a petrol-electric hatchback)
and the Volkswagen Polo BlueMotion 1.2 (a turbodiesel hatchback)
are likely to get the biggest incentives.
Buyers of other diesel models which produce less than 150g/km
could also enjoy the tax break, as long as their cars meet the
stringent Euro V emissions standard.
This is to ensure that these cars produce relatively low levels
of nitrous oxides and hydrocarbons – two pollutants which are
hazardous to health, and which diesel cars tend to emit more than
petrol cars.
Diesel cars which enjoy the rebate will still be liable for the
annual special diesel tax, which is $1.25 per cubic cm of engine
displacement for cars that meet Euro IV standards or higher.
While the Land Transport Authority (LTA) – which will launch and
enforce the new taxation scheme – is still in consultation with
various stakeholders such as motor traders regarding finer details,
The Straits Times understands that the general form of the proposed
system has already been decided.
An announcement is expected within the next few weeks, and the
scheme could kick in as soon as the green vehicle rebate runs out
in December.
The green vehicle rebate was first introduced in 2001 to
encourage the use of greener vehicles. But it has been criticised
for its technology-dependent criteria. For instance, as long as a
new car is electric, a petrol-electric hybrid or runs on compressed
natural gas, it qualifies for a rebate equivalent to 40 per cent
off its ARF. It does not matter how much C02 it releases from its
tailpipe.
And because the rebate is a percentage of a car’s ARF, buyers of
costlier models such as the Porsche Panamera Hybrid and Lexus
LS600h – both limousines – save the most in absolute terms.
The emissions-based format is seen to be a more equitable
solution, and has been lobbied for by various quarters.
In 2010, German car manufacturers, through the German Chamber of
Industry and Commerce, submitted a ‘green paper’ to the Singapore
Government proposing a carbon-based tax system.
A possible switch to an emissions-based system was first
reported by The Straits Times in December.
Motor industry players said the new regime will make consumers
more aware of the fuel efficiency of cars – and consequently the
CO2 they emit – but is unlikely to fuel a big change in buying
habits.
‘The neutral range is too wide,’ said one motor trader. ‘So,
buyers of most cars today are not affected.’
Nor would the scheme make diesel cars significantly more
attractive than now, as the punitive special annual tax is unlikely
to be fully offset by the one-off rebate at the point of
purchase.
Mr Raymond Tang, secretary of the Singapore Vehicle Traders
Association, said: ‘A road tax reduction on top of an upfront
rebate will be more meaningful, as the one-time rebate benefits
only the first owner.’
Mr Tang said the association may also propose other practices in
place in several European cities, such as restricting or banning
the use of more pollutive vehicles in the city centre at certain
times of the day.
The LTA would only say that a review of measures to encourage
green vehicle usage has been in the works since last year. ‘Details
will be released in due course,’ a spokesman said.
