ARF ensures progressivity in car ownership

I REFER to Leslie Yee’s Jul 28 article, “Should the COE system for cars borrow ideas from the ABSD regime for homes?”

Progressivity in the vehicular tax system is mostly achieved through the additional registration fee (ARF), which is calculated based on the open market value of the car. Cars with higher open market value pay more ARF, with the highest tier rate of ARF set at 320 per cent.

The Singapore government has raised the ARF rates twice in the last four years. Imposing additional buyer’s stamp duty (ABSD) on multiple car ownership will not have a significant effect on Certificate of Entitlement (COE) prices, as only 5 per cent of households own more than one car, and foreigners account for less than 2 per cent of all successful COE bids. Such a system would also be costly to administer and enforce.

In land-scarce Singapore, we cannot guarantee every of our 1.5 million or so resident households own a car. But we can guarantee every Singaporean affordable and high-quality transportation. The government will continue to invest in our public transport system and point-to-point transport options to expand connectivity for all.

Elaine Koh director, private and shared mobility division, Ministry of Transport