Blog 3

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The people complain, the government explain, the public get used to it, they reach a consensus, and all is well. Then, prices get raised. Rinse and Repeat.

The issue that I am about to speak of, is the notorious, nefarious, nasty yet innocent sounding “ERP”. For those who do not know what I am talking about, ERP stands for Electronic Road Pricing, which is basically an electronic toll collection scheme designed to deduct a charge from Cashcards; stored value cards which has an initial value stored inside. As such, motorists have to top up the Cashcard whenever it is empty.

In my personal opinion, the ERP is something that belongs solely to Singapore, and as such should be included in our Uniquely Singaporean package. After all, where can we find such a unique system like this?

This post, however, is not about debating the ERP’s usefulness in promoting Singapore to tourists and immigrants. It is about debating the usefulness of the ERP in Singapore’s everyday society concerning everyday Singaporean citizens.

I believe that the main reason for the government putting up ERPs is as an alternative to road tax. ERP prices are going up, for example, in certain areas, the $0.50 charge has been increased to $2.00. Meanwhile, the government is reducing official road tax charges.

I personally believe that the government is trying to lower official road tax charging, in order to attract more foreign talent and immigrants. This would definitely increase the quality of life here in Singapore, so that more would be interested in living in Singapore, because of the lower road tax. Also, it serves as an attractive factor to local Singaporeans, who would be less tempted to move to other countries, therefore minimizing brain drain.

However, I disagree with the method that the government is taking. While the government is slowly lowering road tax, they are increasing ERPs. While as stated in the article, the average motorist, does indeed save a small amount of money every year due to the scheme, I feel that the path that the government has chosen to take concerning the ERP is a mistake.

The two more important factors concerning the implementation of the ERP would be the public reaction and the welfare of the citizens.

To be fair. The ERP has generated an enormous amount of public disapproval, yet it has efficiently completed its purpose; to aid the government in the gradual reduction of road tax by supplementing the government with an alternative way of taxing. I believe that this is because of the public face that the government has chosen to put up in order to reason with the people for the ERP.

They repeatedly emphasize that of utmost concern is to ease traffic conditions. As such, in areas where traffic speed dips below a certain speed, take 45km/h for example, the government will construct an ERP in that area to “reduce traffic congestion”. The response from the people was largely negative, something I think they did not anticipate; as the government was supposedly helping Singaporeans lead a less traffic-congested life.

While statistics do indeed show a decrease in traffic conditions, I feel that Singaporeans are simply taking alternative routes.

Take my family for example. After the ERP gantry was activated on the ECP on Saturdays, my father actually takes a different route to reach my grandma’s house.

Of course this is just an example of one family, but it is actually rather plausible to infer that several other families do that. This would definitely result in the decrease of traffic flow in areas with ERPs. While the ERP does indeed in a way decrease traffic flow in that area, drivers may actually end up jamming the alternative route, which would end up in an ERP on that route. The vicious cycle just continues.

While I am unsure of what exactly is the best course of action for the government to take, I feel that they should have at least completely stuck to their reasoning that the ERP package; which includes road tax and the annual ERP cost, is superior in savings compared to previous years. This would definitely help them in facing the public and the press rather than insisting on the two separate reasons, namely savings and road congestion.

The underlying basis for me suggesting that is because road congestion is not a good enough reason to construct ERPs. When an ERP is constructed, the traffic flow would significantly be reduced, because most drivers are desperately finding a different ERP-less route. As Ang Mo Kio GRC MP Inderjit Singh commented in the article, “More Singaporeans are accepting this.”

But the recent uproar is about the ERPs charging money on Saturday, because it conflicts with the promoting of spending time with your family, as families tend to go to places like Orchard Road which have ERPs on weekends. With the activation of ERP gantries even on Saturday, it effectively contradicts the government’s actions and words.

I suggest that the government place a lesser emphasis on ERP systems, and more on collecting public feedback. The first step they should do is to significantly reduce the working hours of ERPs and instead focus more on the actual raising of road tax.

Singaporeans tend to feel the pinch more when they have to deal with charges and taxes on the spot, and for a lack of a better term, in real-time. In fact, citizens would be actually happier if the sum was presented to them at the end of the year in the form of road tax, as in a way, ignorance is bliss. I am not calling for the citizens to completely ignore their road tax, or for the government to add ludicrous sums to the citizens’ road tax.

Road tax is dependent on the size of the vehicle’s engine. I feel that it is safe to assume that less wealthy citizens would own vehicles with a smaller engine, and so, road tax would actually be a lesser blow on them compared to the painful sting of the ERP. While the average motorist may suffer less because of the ERP system, I feel that we should definitely not neglect the lower income bracket.

Also, I feel that the general public would also react warmly to this. They would only have to deal with seeing dreaded taxes less, and the horror of the beeping every time they pass an ERP would be significantly reduced.

As such, this is the path that I feel the government should take. The ERP has a limited amount of usefulness in Singapore, and while it may suffice for the time being, I do not think that it is a suitable thing to be implemented in the long term.

Higher ERP fees: Car owners not losing out
Section: Prime - National Day Rally
By: YEO GHIM LAY
Publication: The Straits Times 19/08/2008
Page: A9
No. of words: 729

Recent cut in road taxes outweighs the extra they have to pay



CAR owners are not losing out despite paying higher Electronic Road Pricing (ERP) charges, Prime Minister Lee Hsien Loong has said.

Motorists have in fact been saving because a recent cut in vehicle road taxes outweighs the extra that they fork out in increased ERP charges.

In an example he shared with the audience on Sunday night, he said an owner of a 1.6 litre Toyota Corolla, for instance, would have paid $874 in road tax and $122 in ERP annually.

This was prior to changes in the ERP rates six weeks ago, and a 15 per cent cut in road tax which took effect last month.

As a result, the motorist will pay $744 in road tax and $198 in ERP charges.

While he pays more in ERP charges, the motorist will still have an overall savings of $54 every year, said Mr Lee.

Over the years, revenue from vehicle-related taxes has also gone down. In 2000, the Government collected $6.1 billion in such taxes. This was halved to $3.4 billion this year.

So even though the Government is collecting $160 million now from ERP charges – compared to $80 million eight years ago – it is still collecting a lot less in tax revenue than previously.

The reduction was a result of a Government policy shift to enable more Singaporeans to buy cars. Since 2000, ownership charges and taxes have been reduced progressively and more Certificates of Entitlement have been handed out.

This was a change from previously, when high car ownership taxes were a significant burden on owners, said Mr Lee.

For the individual, a new 1.6 litre Toyota Corolla now costs $64,000 including ownership charges, down from $110,000 in 2000. This is even though the open market value is now $16,000, about the same as eight years ago – $19,000.

As a result of the tax reductions, more households now own cars: 430,000 now, compared to 320,000 eight years ago.

This is also evident from the fact that roads and carparks have become more crowded. Hence the need to increase ERP charges to cut down on congestion.

"I know many people are upset by these ERP charges. But we have to see the bigger picture because, in fact, ERP charges are enabling us to benefit Singaporeans so as to reduce the burden on you and to enable more Singaporeans to own cars.

"When we had to make the adjustment this year, we considered it very carefully: how should we do this without increasing the burden on Singaporeans? We worked out an ERP package – not just raising the ERP or putting more gantries – but reducing road tax at the same time so as to offset it overall, to bring down the cost."

Some Singaporeans might not realise this, Mr Lee said.

Citing an example of an unhappy woman driver whom he spoke to, he said that when he asked her how much road tax she paid, the driver did not know. She said she had to check with her husband.

"When the husband pays the bill, there's no 'beep, beep'," Mr Lee said to laughter as he mimicked the sound of the deduction from the cashcard when vehicles go under ERP gantries.

"But when the wife drives the car, each gantry, one beep. So that is a problem and I think that's part of the reason why people are not happy.

"So we have to draw the connections and get people to understand that actually the middle-income Singaporeans have benefited from Government policies."

Apart from a reduction in road taxes, changes have also been made to the public transport system to benefit Singaporeans. More rail lines are being built, 800 extra weekly train trips have been added and bus services are also being improved.

"So we are doing many things. We can't in the end have every household in Singapore own a car, like in America... But what we can do is to have the roads free-flowing and a first-class public transport system for everybody," he said.

Ang Mo Kio GRC MP Inderjit Singh believed Singaporeans accepted that ERP was needed to keep congestion down.

But the issue is one of the timing of the increase given that many are also feeling the impact of inflation, he said when asked to comment.

ghimlay@sph.com.sg



"I would acknowledge that at one time, the car-related taxes were a significant burden on car owners, and many of them are middle-income."

PM Lee, explaining the shift in transport policy towards charging more for usage than for ownership