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Grim news for motorcyclists from Budget 2017

A new tiered tax structure for motorcycles will make some nearly as expensive as small cars…

SINGAPORE — Many motorcycles are about to get more expensive here, some significantly so.

The price changes are thanks to new taxes that kick in with any bike registered with a COE (Certificate Of Entitlement) from this Wednesday’s COE auction.

This was announced by Minister of Finance, Mr Heng Swee Keat, to Parliament today as part of Budget 2017.

“Today, all motorcycles incur the same Additional Registration Fee, or ARF, at 15% of their Open Market Value (OMV). A small but rising number of buyers are buying expensive motorcycles – their motorcycles have OMVs similar to those of small cars,” said the Minister.

The Open Market Value of a vehicle is what it cost to buy from the factory, plus insurance and freight charges.

“Just as we introduced tiers to the ARF for cars in 2013 to improve progressivity, I will introduce two more tiers for more expensive motorcycles,” said the Minister.

TIERS BRING TEARS
Bikes up to $5,000 in OMV will continue to pay 15 percent. The next $5,000 will attract a 50 percent ARF rate. Beyond that it gets seriously painful, with any OMV amount above $10,000 subject to a whopping 100 percent ARF.

A BMW R 1200 GS Adventure (below), a popular adventure bike, has an OMV of around $21,000, so it would see its price rise by $13,500 to just over $60,000 — within sight of some small cars’ prices.

Some in the motorcycle trade don’t see this having an impact on motorcycle COE prices, which have been consistently above the $6,000 mark since last year.

Eugene Mah (pictured below), the managing director of Mah Pte Ltd, says COE prices are high to due the fundamental forces of demand and supply.

“Doing this increases the prices of big bikes which may potentially reduce the demand for them, but those who buy small bikes are still going to carry on buying,” he said.

He points out that a 400cc scooter from Taiwan would already fall into the 50 percent ARF tax bracket. The nicest motorcycle in the Mah stable to fall under the $10,000 OMV limit would be a Triumph Bonneville T100, he says.

Yet, Mah Pte Ltd, which imports higher-end brands such as Indian, Moto Guzzi, Triumph, Vespa and Victory, does expect to see its business affected.

This 900cc Triumph is possibly the nicest motorcycle you can still buy without incurring the new 100 percent ARF for bikes

“Mah Pte Ltd expects to be impacted by the adjustments to Additional Registration Fee (ARF) for motorcycles, announced today at Budget 2017. In fact, the changes will affect not just the bigger capacity machines, but the vast majority of mid-sized motorcycles as well,” the company said on its Facebook page.

“We recognise that many motorcyclists in Singapore, many of whom depend on motorcycles for their bread and butter, will be affected by these changes. We hope the government will continue to monitor the impact this will have on our community.”

The Minister said that based on current buying, “more than half” of bikers will continue to pay the current 15 percent ARF. What was left unsaid is that bikers who want to play, will have to pay.

Changes to the COE system
It wasn’t all bad news for motorcyclists. The Category D COE (for bikes) will no longer contribute to the pool of Category E (Open) COEs. In the last ten years fewer than 0.1 percent of Open Category COEs were used to register bikes, even though 15 percent of the number of deregistered motorcycles contributed to the Open Category COE population. This means every seven deregistered bikes effectively came back as a car, lorry or bus.

From May this year the bike contribution to the Open Category COE pool will be stopped, which should stabilise the motorcycle population at 142,439 (as of the end of 2016).

While the motorcycle population will no longer shrink, the new ARF structure means the bikes themselves probably will.

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