Up to 34 per cent reduction in road tax for electric cars: Ong Ye Kung

Nicholas Yong
·Assistant News Editor
·4-min read
Transport Minister Ong Ye Kung addresses Parliament during the Committee of Supply debate on Wednesday, 3 March 2021. (SCREENGRAB: Ministry of Communications and Information YouTube channel
)
Transport Minister Ong Ye Kung addresses Parliament during the Committee of Supply debate on Wednesday, 3 March 2021. (SCREENGRAB: Ministry of Communications and Information YouTube channel )

SINGAPORE — From 1 January 2022, Singapore's road tax framework will be revised to ensure that owners of electric and internal combustion engine (ICE) cars of similar makes and luxury pay similar road tax, said Transport Minister Ong Ye Kung in Parliament on Thursday (4 March).

In this regard, the road tax brackets of 30-90kW and 90-230kW will be merged, such that electric cars in the 30-230kW bracket are subjected to the road tax formula of the 30-90kW bracket. This will lead to a reduction of up to 34% in road tax for electric cars in the 90-230kW bracket.

These changes will also apply to petrol-electric cars that currently pay road tax based on their maximum electric power rating.

Ong told the House, "This is inherently a subjective exercise and won’t be very scientific, but it reflects the policy objective, which is that a large part of road tax is a luxury tax."

And as more models emerge, the road tax schedule will be further reviewed, with a view not to over-charge electric vis-a-vis ICE cars, said Ong.

Why revise the framework?

INFOGRAPHIC: Ministry of Transport
INFOGRAPHIC: Ministry of Transport

Speaking during the Committee of Supply (COS) debate on the Singapore Green Plan 2030, the minister noted that there was already a "significant downward revision" – up to 40 per cent – in road tax for electric cars from 1 January.

The further revision is being undertaken as the current framework for larger electric cars is "a little bit off", said Ong.

He gave the example of a 105kW MG ZS EV, and a 1,800cc Renault Megane, which are both medium-sized family cars and both subject to annual road tax of around $1,000.

But this is not the case for slightly larger, mass-market segment cars. For example, a 150kW Hyundai Kona Electric Standard Utility Vehicle is subject to about the same road tax as a 2,000cc Audi Q5/Q7, but the two vehicles are at different levels of luxury.

Similarly, a 225kW standard Tesla Model 3, and 3,000cc Porsche Cayenne are subject to about the same road tax.

Ong, who is also a Member of Parliament (MP) for Sembawang, noted that this is because authorities have thus far linked the road tax schedules of electric and ICE cars by propulsion power. "Hence, we have inadvertently penalised the more power-efficient electric cars."

The new framework

INFOGRAPHIC: Ministry of Transport
INFOGRAPHIC: Ministry of Transport

Therefore, the current electric car road tax bands of 30-90kW and 90-230kW will be merged and subjected to the current road tax formula of the lower band, that is, the 30-90kW band. Road taxes of electric cars in the upper band will then be reduced.

For example, the annual road tax for a Hyundai Kona Electric will fall from about $1,400 to $1,100, while that of a Tesla Model 3 will drop from $2,300 to $1,500. This will make their road taxes comparable to ICE models with a similar look and feel.

Meanwhile, taxes for "big luxurious cars" like the electric Porsche Taycan will remain unchanged for now, said Ong.

Separately, the minister dismissed several MPs' suggestions to waive all or almost all taxes on electric cars as "not appropriate". He noted, "The objectives of the COE system and upfront vehicle ownership taxes are mostly to manage congestion, to which there is no difference between ICEs and EVs."

Rebates on EV purchases

Ong noted that the EV Early Adoption Incentive (EEAI) and the enhanced Vehicular Emissions Scheme (VES), which came into effect on 1 January, already provide prospective electric car buyers with combined cost savings of up to $45,000.

In addition, the minimum Additional Registration Fee (ARF) of $5,000, which is imposed on EVs, will be reduced to zero for fully electric cars and taxis registered from 1 January 2022 to 31 December 2023.

The minister noted that there have been about 100 new electric car registrations in Singapore since the start of 2021. The Singapore Green Plan includes a push for EVs, with a 2040 target to phase out ICE vehicles and have all vehicles run on cleaner energy.

From 2030, all new car and taxi registrations must also be of cleaner-energy models, while all new diesel car and taxi registrations will cease from 2025.

"Today, vehicles emit about 6.4 million tonnes of CO2-equivalent per year. If the subset of light vehicles all ran on electricity, the total net carbon abatement would be about 1.5 to two million tonnes per year," said Ong.

"This abatement is about 4 per cent of our total national emissions – not insignificant."

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