Budget 2023: Higher luxury car tax not expected to slow down car sales

• Buyers of cars with Open Market Value (OMV) between S$40,000 and S$80,000 to pay higher Additional Registration Fee (ARF) of 190 per cent to 250 per cent
• ARF rates raised to 320 per cent from 220 per cent for cars in the highest OMV tier of more than S$80,000
• Preferential ARF rebates capped at S$60,000 for cars and taxis

SINGAPORE’S move to raise taxes by hiking the additional registration fee (ARF), more so on luxury cars, is deemed a “cooling measure” of sorts but one that is unlikely to hurt demand, according to industry participants.

“This is something like a cooling measure ... a luxury tax,” said Neo Nam Heng, adviser to the Automobile Importer & Exporter Association. “Since ten years back, despite the tax increases, the number of luxury cars sold in Singapore has still been growing ... and has multiplied. So the latest measures will not change that (car sales in high-end segment).”

“The super rich who buy these cars will still be able to afford them,” he added. However, Neo said he expects a knee-jerk reaction in the next few rounds of the Certificate of Entitlement (COE) bidding exercise, which could see some “pricing adjustments”.