Thursday 26 February 2015

[Straits Times] Hefty petrol tax controls traffic congestion better

IN THIS year's Budget, the Government raised the petrol duties to discourage Singaporean motorists from driving unnecessarily, as well as to reduce carbon emissions ("Petrol duty up but there's a one-year road tax rebate"; Tuesday).

While the intent is understandable, it is unlikely that this will yield the outcome desired.

This is because the high cost of private vehicle ownership, given high certificate of entitlement (COE) prices, makes petrol a marginal utility cost for Singaporean motorists ("Costlier petrol 'unlikely to change driving habits'"; yesterday).

In order to truly discourage driving but to fulfil many Singaporeans' aspiration of car ownership, the Government should consider abolishing the COE altogether and replacing it with a hefty petrol tax.

The Government could use a formula to price the petrol duty in lieu of COE by dividing the COE price over the average mileage travelled by a Singaporean motorist over a span of 10 years.

With such a system, more Singaporeans can own cars but would definitely think twice about driving as they would be charged for car usage and not car ownership.

Additionally, this will influence aspiring vehicle owners to select more petrol-economical vehicles, and the carbon emission per kilometre travelled will be reduced correspondingly.

Lee Yong Se