Car Buyer Advice

Crazy Rich Singapore: No discount for fuel prices and road tax rebates

Welcome to crazy rich Singapore, the land where there’s good and affordable food, and everything else is just expensive. As of 27 February 2022, 92-octane petrol cost up to S$2.70 a litre, 95-octane petrol went for up to S$2.76 a litre, while 98-octane petrol surged past the S$3 barrier to reach up to S$3.25 a litre.

In short, pump prices in Singapore have hit record levels in recent weeks, and this phenomenon is attributed to a global spike in crude oil prices caused by a supply dip and the war in Ukraine.

Sadly, despite the inflation, there is no plan locally to reduce or suspend fuel duties or provide road tax rebates. Finance Minister Lawrence Wong added that adding these measures would incur counter-productive effects and amount to a subsidy on private transport.

Before you get riled up and raise your torches and pitchforks, there are good reasons why the government has no plan to reduce fuel duties, and we’ll be discussing these main points:

1. Few car owners in Singapore

In a ministerial statement on inflation and business costs on 4 April, Mr Wong told Parliament that fewer than four in 10 households in Singapore own cars, and amongst the lowest income groups, only one in 10 do. Therefore, such subsidies on private transport would only benefit a small and well-to-do group.

Do you agree with the statement? Well, we went to check out the statistics, and apparently, Singapore’s car ownership rate is about 11%. Also, despite the government’s efforts to bring down the number of cars roaming around this tiny island, there’s still an estimate of one million vehicles on the roads. More than 600,000 of those are private and rental cars, including cars used by ride-hailing services such as Grab.

2. Disrupt plans for sustainable living

You would’ve probably seen the news and heard of the Singapore Green Plan 2030 that was announced on 10 February 2021. This is a nationwide movement to advance the local agenda on sustainable development and living. As part of the Green Plan, the government introduced the EV early adoption incentive scheme and about $30 million in rebates were rolled out last year to encourage drivers to make the switch to green.

The scheme, which will be available until gives buyers of fully electric cars and taxis a rebate of up to 45% on their additional registration fees, capped at $20,000. Relating back to cutting fuel duties, doing so will reduce the incentive to shift to more energy-efficient modes of transport.

To read about the attractive incentives of owning an electric vehicle (EV), you can check out this article ‘Incentives of owning an Electric Vehicle in Singapore’. Perhaps, it’s time to stop fretting over increasing pump prices, and make the switch to sustainable driving?

3. Inconsistency with the increased carbon tax

Mr Wong highlighted in his last point that similar to a carbon tax, Singapore does not impose such a tax on fuel. In a joint press release on the Green Plan on 8 March 2022, Senior Minister Mr Teo Chee Hean spoke about having accelerated the decision to achieve net-zero emissions, and that the revised carbon tax levels will send the appropriate price signal across the economy, and shape business decisions and individual consumption practices.

As the nation has raised the carbon tax to speed up the green transition and to achieve net-zero emissions, Mr Wong added that the act of reducing fuel duties will not align with the current and right direction on the carbon tax.

For the uninitiated, the country collects fuel duties and road taxes for revenue, and also to charge the negative externalities of vehicle transport, such as the environmental pollution and adverse impact on public health. Fuel duties collected averaged $920 million a year in the last five years, and revenue from these duties and taxes are also used for various programmes and subsidies that “directly benefit” Singaporeans.

As for the ones who are directly impacted by the high pump prices, namely delivery riders, taxi, and private-hire car drivers, various car operators have administered increases in fares, and also partnered with petrol companies to offer fuel at discounted prices.

If you’re running a business involving transport and delivery of goods and services and would like to save your time and cost amidst the fuel price hike, you might want to consider utilising clean energy vehicles. A major perk of getting an electric commercial vehicle (ECV) is the savings on energy costs. Read about ECV and the EV-related incentives here.

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