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