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Share of govt revenue from COE, ARF to rise to 10% (Amended)
COE premiums and registration taxes together will account for 10 per cent of the total revenue the government collects in FY2015, up from 8 per cent the year before.
Vehicle quota premiums of S$5.08 billion are projected for FY15, making up 6.9 per cent of the estimated S$73.21 billion in total revenue the government expects to collect from April 2015 to March 2016, according to data from the Ministry of Finance.
As for motor vehicle taxes, S$2.12 billion should be forthcoming, or 2.9 per cent of total revenue projected.
For comparison, personal income tax will constitute 12.2 per cent of FY15 revenue, while the two biggest contributors are corporate income tax (18.4 per cent) and the goods and services tax (14.3 per cent).
The vehicle quota premium is the amount paid for each certificate of entitlement required for the registration of a passenger car, taxi, motorcycle or commercial vehicle.
Currently, the small car COE premium, or Category A, costs S$57,199, while the big car premium, or Cat B, is S$66,751. Cat E, the open category, stands at S$67,901, while Cat C, for goods vehicles and buses, costs S$53,202. Cat D, the motorcycle category, is at an all-time high of S$5,800.
On the other hand, motor vehicle taxes refer to the Additional Registration Fee, which is the tax incurred when registering a vehicle and is separate from customs duty. The ARF for cars became a progressive tax in February 2013 from a flat tax of 100 per cent of the OMV or open market value. Under the tiered structure, the ARF for cars with OMVs of up to $20,000 is 100 per cent, with the next $30,000 of the OMV attracting an ARF rate of 140 per cent, while any value beyond $50,000 is levied an ARF rate of 180 per cent.
After the tiered ARF structure was introduced, FY13's motor vehicle taxes actually fell 8.5 per cent to S$1.65 billion from FY12's S$1.803 billion, mainly because of a roughly 20 per cent drop in car registrations. But motor vehicle taxes bounced back up to S$1.81 billion in FY14, or 9.8 per cent, with an approximately 30 per cent increase in car registrations.
Vehicle quota premiums did not experience the same dip. They have been rising since FY08.
With this year's expected spike in the COE quota - seen to be anywhere between 50 and 75 per cent for passenger cars - it is no surprise that the government is projecting a 38.7 per cent increase in vehicle quota premium revenue, and a 17 per cent rise in motor vehicle taxes.
"The COE quota will double but COE prices won't fall by half, so of course there will be a revenue increase," said the managing director of a luxury dealership.
"And now that the CEVS bands and surcharges will be tightened in July, the rush to buy a new car is sure to push COE premiums up,"' he said, referring to the Carbon Emission-based Vehicle Scheme (CEVS), which will be extended for another two years from July 1, 2015, but with two refinements. They involve the rebates requiring reduced carbon dioxide limits, and surcharges on gas-guzzling cars increasing for lower emissions.
Correction:An earlier version of this article incorrectly stated that "Vehicle quota premiums did not experience the same dip. They have been rising since FY06''.
The year is in fact FY08. The article above has been revised to reflect this.