Singapore Budget 2019: Fuel duties jacked up for diesel vehicles
Singapore
DIESEL duties were doubled on Monday in a bid to cut pollution from exhaust, two years after the tax system for diesel fuel was first rejigged.
The move, announced by Finance Minister Heng Swee Keat in his Budget speech, came with relief measures, such as tax rebates, to soften the financial blow to vehicle owners.
Observers told The Business Times the price impact is likely to curb diesel demand, as Mr Heng hopes, but added that more can still be done.
The excise duty on diesel has now been hiked to S$0.20 a litre - twice the duty introduced in 2017. Before that, diesel cars and taxis had to pay just a lump sum annual special tax, however much fuel they consumed.
Diesel vehicles still make up the bulk of taxis, buses and goods vehicles here, according to LTA data. There were 15,089 diesel taxis, 18,875 diesel buses and 136,478 diesel goods vehicles as at end-2018.
Wong Meng Yew, tax partner and global trade advisory leader at Deloitte Singapore and South-east Asia, called the excise duty increase significant, and said it could push both private car owners and taxi operators to switch to other kinds of vehicles.
But he added that Mr Heng's planned cuts to the annual special tax for diesel vehicles "will cushion only a minor cost arising from the overall annual increase in costs, especially for commercial vehicle operators".
The annual special tax will be slashed for good, by S$100 for diesel cars and S$850 for taxis - a move also seen in the last round of diesel taxes.
Cash rebates of up to S$1,800 for diesel buses that carry schoolchildren are, similarly, back on the table.
Owners of commercial diesel vehicles will also get three years of new road tax rebates to cope: 100 per cent in the first year, 75 per cent in the second and 50 per cent in the last.
Mr Heng said the annual special tax cuts could more than halve the impact of the duty increase for car owners, and reduce the impact by more than three-quarters for taxis. "I strongly urge taxi companies to pass on the savings to their drivers, like they did in 2017," he added. Comfort-DelGro Corp has pledged to do so.
Evelyn Lim, head of tax at BDO Tax Advisory, said that, to keep diesel use down, the government could continue to encourage the adoption of environmentally friendly engines, such as electric cars, with islandwide electric vehicle charging infrastructure.
Still, Oliver Redrup, transportation director at PwC Singapore, warned that sweeteners for green vehicles, such as cheaper Certificates of Entitlement or lower Electronic Road Pricing tolls, must be weighed against transport policy objectives such as controlling the private car population.
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