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Budget 2021: Petrol duty hiked up to 23% as Singapore takes fresh steps to combat climate change

SINGAPORE — The Government has hiked petrol duty rates with immediate effect, as Singapore takes big steps to combat climate change, Deputy Prime Minister Heng Swee Keat announced on Tuesday (Feb 16) as part of this year’s Budget speech.

Duty for premium grade petrol has gone up by 15 cents a litre, while that of intermediate grade petrol has been raised by 10 cents a litre.

Duty for premium grade petrol has gone up by 15 cents a litre, while that of intermediate grade petrol has been raised by 10 cents a litre.

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  • Duty for premium grade petrol has gone up by 15 cents a litre and that of intermediate grade petrol by 10 cents a litre
  • There will be a one-year road tax rebate to offset the impact of the hike in petrol duty
  • The Additional Registration Fee floor for electric cars will be lowered from S$5,000 to zero
  • The Government will adjust the road tax for electric cars as well


SINGAPORE — The Government has hiked petrol duty rates with immediate effect, as Singapore takes big steps to combat climate change, Deputy Prime Minister Heng Swee Keat announced on Tuesday (Feb 16) as part of this year’s Budget speech.

The duty for premium grade petrol is now 79 cents a litre, raised by 15 cents a litre or a 23 per cent increase.

The duty for intermediate grade petrol is now 66 cents a litre, raised by 10 cents a litre or an 18 per cent increase. 

To cushion the impact of the rise in petrol duties, the Government will give:

  • A one-year road tax rebate of 15 per cent for cars using petrol

  • 60 per cent for motorcycles using petrol

  • 100 per cent for goods vehicles and buses using petrol

In addition, owners of smaller motorcycles up to 400cc will receive S$50 or S$80 in cash, depending on their vehicle’s engine capacity.

Active taxi and private-hire car drivers using petrol and petrol hybrid vehicles will also be given a petrol duty rebate of S$360, to be issued over four months. This is in addition to the one-year road tax rebate of 15 per cent to all taxis and passenger cars using petrol.

All road tax rebates will take effect from Aug 1 this year, and the additional petrol duty rebates for motorcycles, taxis and private-hire cars will be introduced by mid-2021. 

The Land Transport Authority will release more details on this in April.

Graphic: Samuel Woo/TODAY

Taken together, these measures would offset about one year of petrol duty increases for taxis and motorcycles, and about two-thirds for commercial vehicles and cars, Mr Heng said.

Most of the expected revenue increase for petrol duty changes in the coming year will be given out through the offsets, which are estimated to cost S$113 million, he added.

The last time the Government introduced a hike to petrol duties was in 2015, when the duty for premium grade petrol was raised by 20 cents a litre, or 45 per cent, and the duty for intermediate grade petrol was raised by 15 cents a litre, or 37 per cent.

In a press release on Tuesday, LTA said that the rebates would reduce the road tax payment to:

  • S$238 for petrol and petrol-hybrid classic cars, down from S$280

  • S$112 for petrol and petrol-hybrid classic motorcycles, down from S$280

  • A minimum of S$43 and S$60 for petrol and petrol-hybrid off-peak cars, down from S$50 and S$70, respectively

Vehicle owners who have already paid road tax beyond Aug 1 this year based on the current road tax rates will have their bill offset at the next renewal, it said.

If the vehicle is transferred before its next road tax renewal, the excess road tax paid will be offset against the transfer fee payable, and any remaining amount will be transferred along with the vehicle to the new registered owner, LTA added.

In his speech, Mr Heng, who is also Finance Minister, gave more details of the Singapore Green Plan 2030, a multi-ministry roadmap that was launched last week to make Singapore more environmentally sustainable over the next 10 years.

They include lowering the Additional Registration Fee floor for electric cars to zero between January 2022 to December 2023, and adjusting the road tax for electric cars so that owners of these cars can pay road tax that is comparable to those with internal combustion engine (ICE) cars.


The change to the Additional Registration Fee regime would make electric cars more affordable as the floor is currently set at S$5,000 under the electric vehicle early adoption incentive, which kicked in on Jan 1 this year.

Under that incentive, those registering cars that are fully electric were given a 45-per-cent rebate off the Additional Registration Fee, capped at S$20,000.

Mr Heng said that the lowering of the floor to zero will allow mass market electric car buyers to maximise rebates and narrow the cost differential between electric cars and ICE cars. 

These would further encourage the adoption of electric vehicles, he said, describing them as the “most promising clean-energy vehicle technology today”.

The Government will also revise the road tax treatment for electric cars, by adjusting the road tax bands so that a mass market electric car will have road tax comparable to an ICE equivalent.

This comes as a further adjustment from last year’s Budget, when it was announced that mass market electric cars would incur an annual usage cost that is about 9 per cent lower than their ICE equivalents under that revision.

Graphic: Samuel Woo/TODAY

Details of the revision will be released when Transport Minister Ong Ye Kung delivers his ministry’s Committee of Supply (COS) speech.

Mr Heng reiterated the Government’s new goal to deploy 60,000 charging points at public car parks and private premises by 2030 to support the growth of electric vehicles in the next decade. This was announced at the launch of the Green Plan last week.

He said that this is “more ambitious” than the Government’s former target of 28,000, and would be achieved by setting aside S$30 million over the next five years for electric vehicle-related initiatives, including measures to improve charging provision at private premises.


To build the country’s food resilience, the Government will continue to support technology adoption in the agri-food sector by setting aside S$60 million for a new fund, to be called the Agri-Food Cluster Transformation Fund.

This will replace the S$63 million Agriculture Productivity Fund that was launched in 2014 to help co-fund systems to control environmental factors and boost production, and to help farmers fund research and design test-beds. 

Ms Grace Fu, Minister for Sustainability and the Environment, will elaborate on this during her ministry’s COS speech.

Mr Heng said that Singapore had harnessed technology to overcome its water and land constraints, and it would do the same for climate change.

He referred to the Aquaculture Centre of Excellence as a “promising story of innovation” in this regard, pointing out that it has innovated and patented Eco-Ark, an advanced aquaculture technology that is able to produce 20 times more output than the average at coastal fish farms.


As sustainability efforts require capital, the Government will “take the lead” by issuing green bonds on select public infrastructure projects, Mr Heng said. Bonds are an investment instrument that generate fixed rates of returns for investors.

The issuance will serve as a reference for the Singapore-dollar corporate green bond market.

“As an international financial centre, Singapore can catalyse the flow of capital towards sustainable development, not just in Singapore, but in Asia,” he said.

Singapore's central bank had been driving an action plan to develop green finance solutions and markets. The Government’s issuance of green bonds will build on such efforts by deepening market liquidity for green bonds, attracting green issuers, capital and investors, and anchoring Singapore as a green finance hub, Me Heng added.

For a start, the Government has identified up to S$19 billion worth of green projects in the public sector that could be financed with green bonds.

Among them is the Tuas Nexus project, which integrates waste and water treatment facilities and maximises energy and resource recovery in the solid waste and used water treatment processes.


Mr Heng said that an initiative under the Green Plan is GreenGov.SG, which will nudge the public sector to commit to more ambitious goals to protect the environment.

It would give renewed focus to the public sector’s contribution towards national sustainability goals and remind all public officers that sustainability “must be at the core of our work”.

The Government will try to “lead by example” on this front, but businesses and households need to play their part as well.

As demand for green products and technologies increase globally, businesses may seize new opportunities for growth by tapping a programme that the Ministry of Trade and Industry would launch later, he said.

To be called the Enterprise Sustainability Programme, it would help enterprises, especially small- and medium-sized enterprises, use their resources more efficiently and develop new green products and solutions.

“Building a green Singapore will require a whole-of-society effort, and I hope that we can harness the ideas and energies of the public, private and people sectors,” Mr Heng said. “Together, we can build a sustainable home for all.

Related topics

Budget 2021 petrol price climate change Green Plan electric car

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