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Singapore Budget 2015: Changes to vehicle taxation

Authorities have announced three drastic changes to vehicle taxation in Singapore, the biggest one being the increase of petrol duties followed by a road tax re

Date Published: 24 Feb 2015
Singapore Budget 2015: Changes to vehicle taxation

Starting from 23rd of February 2015, the Singapore Government has increased petrol duty rates in a bid to reduce car usage amongst motorists here as well as to reduce carbon emissions. To offset the increase, there will also be a one-year road tax rebate of 20% for cars, 60% for motorcycles and 100% for a small number of commercial vehicles using petrol.

The rebate would offset about two-thirds of the impact from the petrol duty change on intermediate grade petrol for the average car. It is estimated that the change in petrol duty rates would yield an estimated SGD$177 million, whilst the one-year road tax rebate will cost the Government SGD$144 million.

Current Petrol Duty Rate VS New Petrol Duty Rate (*source: Ministry of Finance, Singapore)

 

Singapore Budget 2015: Changes to vehicle taxation

Announced during the 2015 Budget Statement, the revised duties saw premium (RON 97 and up) grade petrol prices raised by 20 cents per litre, while intermediate fuels (RON 90 petrol and above but below RON 97) were increased by 15 cents per litre with immediate effect. Petrol duty rates have been unchanged since 2003

Just how much more?

That said, let’s take a look at how much more a driver of the current 2015 Toyota Corolla Altis has to pay as compared to before the petrol duties were raised. Before the changes took place, RON 98 was retailing for SGD$1.86 per litre (price as of 17 February 2015), which would amount to a price of SGD$102.30 for a 55-litre tank. After the duties were raised, the fuel now goes for SGD$2.01 per litre, or SGD$110.55 for a full tank of gas. Hence, the average driver would be paying an additional SGD$8.25.

History of petrol duty rates

The Budget Statement 2003 speech saw the Government then, rolled out a series of measures on pre-existing excise duties on petrol. Before Budget 2003, excise duties were levied either at an ad valorem rate on final pump price before the Goods and Services Tax (GST), or at a prescribed floor rate, whichever was higher. If petrol prices raised, the duties would go up correspondingly. This added an extra burden on businesses and motorists.

Petrol Duty Rates in 2003 (*source: Ministry of Finance, Singapore)

 

Singapore Budget 2015: Changes to vehicle taxation

To address this, excise duties were imposed at a specific rate instead, so that the duties no longer fluctuate with oil prices. Before 2003, premium petrol excise duties were 35% of pump price without GST, or 44 cents per litre (whichever was higher), Intermediate was also 35% of pump price without GST, or 41 cents per litre (whichever was higher). After 28 February 2003, the grades of petrol were charged a flat rate of 44 cents and 41 cents respectively.

Refining the Carbon Emissions Vehicle Scheme (CEVS)

Current CEVS Scheme (*source: Ministry of Finance, Singapore)

 

Singapore Budget 2015: Changes to vehicle taxation

CEVS was first introduced in 2013 to promote environmental friendliness, whereby cars that admitted lower levels of carbon emissions received rebates of up to SGD$20,000 off their Additional Registration Fee (ARF), while those with high carbon emissions paid a surcharge of up to SGD$20,000. The current CEVS scheme will expire on 30th June 2015.

New CEVS Scheme (*source: Ministry of Finance, Singapore)

 

Singapore Budget 2015: Changes to vehicle taxation

To encourage a greater shift to green cars, the CEVS will be extended by two more years from 1st July 2015 to 30th June 2017, with two refinements: the surcharge and rebate bands have been updated to reflect improvements in vehicle engine technology and the increase of the highest rebate and surcharge quantum from SGD$20,000 to SGD$30,000.

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