Increase petrol taxes to ease COE prices of smaller cars: economist

Singapore’s government could do more to help the environment through the Budget by increasing petrol taxes and raising the certificate of entitlement (COE) quota on smaller cars, an economist from Nanyang Technological University said on Monday.

Speaking at a forum organised by the Economic Society of Singapore on Budget 2014, Ng Yew Kwang, professor of economics at Nanyang Technological University (NTU), said that raising petrol taxes would encourage motorists to take trips only when necessary.

It would also relieve the pressure on rising COE prices, especially those for Category A vehicles, cars 1600cc and below and engine power not exceeding 97 kilowatts.

He said that the government should increase the quota for the smaller vehicles to allow their COE prices to become more affordable, as these have already come close those of the bigger cars in category B.

Increasing petrol taxes would offset the revenue impact from a decline in smaller cars' COE prices, he noted.

The economics professor also suggested that the government increase taxes on luxurious cars and move to boost the number of taxis on the road.

It had been expected by many analysts that Budget 2014, which was unveiled by Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam last Friday, would raise taxes on the rich. Instead, higher duties on cigarettes, alcohol and lottery betting were announced.

Ng said he wanted to see more things in the Budget that would address environmental issues.
He criticised the electricity rebates announced by Tharman as being “environmentally unfriendly” as they would encourage people to consume more electricity.

Tharman said that 800,000 households in HDB flats would receive one-off vouchers to offset utility bills.

Ng said providing a lump sum that households could choose to spend however they wished would have been a better alternative.