Aug 18, 2008
Car owners not worse off By Yeo Ghim Lay CAR owners are not losing out despite paying higher Electronic Road Pricing (ERP) charges, said Prime Minister Lee Hsien Loong, who backed this up with figures.
On balance, motorists in fact gain because a recent cut in vehicle road taxes outweighs the extra that they have to fork out in higher ERP charges.
As an example, he said an owner of a 1.6 litre Toyota Corolla would have paid $874 in road tax and $122 in ERP annually - before the changes in the ERP rates about six weeks ago, and the 15 per cent cut in road tax last month.
As a result, the motorist will now pay $744 in road tax and $198 in ERP charges.
While he pays more in ERP charges, the motorist will still have an overall savings of $54 every year, said Mr Lee in his National Day Rally speech on Sunday night.
Over the years, revenue from vehicle-related taxes has also gone down.
In 2000, the Government collected $6.1 billion in such taxes. This was halved to $3.4 billion this year.
So even though the Government is collecting $160 million now from ERP charges - compared to $80 million eight years ago - it is still collecting a lot less in tax revenue than previously.
The reduction was a result of a Government policy shift to enable more Singaporeans to buy cars.
Since 2000, ownership charges and taxes have been reduced progressively and more Certificates of Entitlements are handed out.
For the individual, a new 1.6 litre Toyota Corolla, for example, now costs $64,000 including ownership charges. This is down from $110,000 in 2000.
This is even though the open-market value is now $16,000, which is about the same as what it was eight years ago - $19,000.
Because of the tax reductions, more households now own cars - 430,000 compared to 320,000 eight years ago.
This is also evident from the fact that roads and carparks have become more crowded. Hence, the need to raise ERP charges to cut down on congestion, he explained.
'I know many people are upset by these ERP charges. But we have to see the bigger picture because, in fact, ERP charges are enabling us to benefit Singaporeans so as to reduce the burden on you and to enable more Singaporeans to own cars," said the PM.
'So when we had to make the adjustment this year, we considered it very carefully: how should we do this without increasing the burden on Singaporeans? We worked out an ERP package - not just raising the ERP or putting more gantries - but reducing road tax at the same time so as to offset it overall to bring down the cost.'
Apart from a reduction in road taxes, changes have also been made to the public transport system to benefit Singaporeans as a whole, he said.
More rail lines are being built, and about 800 extra train trips a week have been added. Bus services are also being improved.
'So we are doing many things. We can't in the end have every household in Singapore own a car, like in America. That's not possible. But what we can do is to have the roads free-flowing and a first-class public transport system for everybody,' said Mr Lee.