Budget 2015: Petrol duty hike unlikely to encourage switch to greener cars, says Ang Wei Neng

SINGAPORE – Pointing out that the increased petrol duty has been labelled as the “biggest stink” in this year’s budget by car users, Jurong GRC Member of Parliament Ang Wei Neng said the move appears unwise.

He had calculated that the increased petrol duty would yield about S$177 million a year, or net revenue of S$33 million in the first year after the one-off road tax rebate.

“If this budget is an election year budget as framed by Ms Rachel Chang of The Straits Times in her commentary, then the S$33 million gain from the petrol duty hike does not appear to be a clever move,” he said. “This is because most of the budget goodies only take effect later this year or in 2016 but the increase in petrol duty is immediate, burning a hole in the pocket before one can smell something sweet.”

Mr Ang was the last of the 17 speakers in the debate on the Budget Statement today (March 4) before Parliament adjourned for a break. However, he also noted that the petrol duty hike needs to be looked at together with the policy tweak on the Carbon Emission-based Vehicle Scheme (CEVS).

While the Government may be trying to urge Singaporeans to buy car models with lower carbon emissions by increasing rebates and petrol prices at the same time, Mr Ang estimated the impact of increase petrol tax of S$0.15 per litre to cost S$4,610 over 10 years. This is less than the S$5,000 rebate for an A4 band car — the lowest band that enjoys rebates for lower emissions.

Pointing out that the cost of a greener car is much higher than a normal car, and the current tweak in the CEVS only increases the rebate for the highest band of lower carbon emission cars, Mr Ang urged the Government to be more generous in the Additional Registration Fee rebates under the CEVS.

“Otherwise, the increased petrol duty is unlikely to nudge Singaporeans to buy greener car and will be portrayed as a means to raise tax revenues,” he said.