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2 authors, including:
Mukul G. Asher
National University of Singapore
155 PUBLICATIONS 477 CITATIONS
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capita GNP in 1995 was S$34,459, approximately US$24,600), only one person in ten
owns a car. Singapore provides an interesting example of the application of an overt policy
of trying to balance demand for private transport with the constrained supply of road
infrastructure and land availability, using market-related mechanisms to achieve this
objective.
Land Transport Authority (LTA), a statutory board under the Ministry of Communica
tions, established to spearhead improvements to the land transport system. Agencies
currently subject to the LTA include: the Roads and Transportation Division (formerly of
could have a world-class land transport system. This was presented to Parliament in
January 1996.
The White Paper described four ways to realise a world-class transport system in ten
to fifteen years' time. These were:
* Department of Economics and Statistics, National University of Singapore.
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May 1997
to cost S$4.8 billion to construct and S$80 million to operate, is under study. Technology
(such as green waves) will be extended to cover the whole island, and automatic traffic
monitoring systems will be adopted to maximise the capacity of the road network.
The Mass Rapid Transit network will be expanded to 160 km to serve heavy traffic
corridors. Light Rail Systems will serve as feeders to the Mass Rapid Transit network.
While the White Paper also proposed a significant revision to the financing framework
for rail which existed in January 1996, the rest of this note will focus on motor vehicle
tier pricing structure (see Table 1). The ALS operates from 7.30am to 7.00pm on
weekdays and 7.30am to 2.00pm on Saturdays and on the eve of five major public
holidays. It is not in operation on Sundays and public holidays. For entry into the
Restricted Zone, which at present covers an area of 725 hectares with 33 vehicular entry
points, a valid licence must be pre-purchased and displayed by all vehicles except
scheduled buses, police and emergency vehicles (see Table 1 for a schedule of rates). A
linear version of the ALS, known as the Road Pricing Scheme (RPS) was introduced on
the East Coast Parkway (an expressway) in June 1995. The RPS was further extended to
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Recent Developments in Singapore's Motor Vehicle Policies S-Y. Phang and M. G. Asher
Table 1
Scale of Fees/Taxes for Motor Vehicle Usage in Singapore (May 1997)
(S$l is approximately US$0.71)
Area Licensing Scheme (ALS):
For entry into the restricted zone (which includes the most congested parts of the CBD) at designated times
a valid licence must be purchased and displayed by all vehicles except scheuled buses, police vehicles and
emergency vehicles. There are two types of ALS licences: a Part-Day licence and a Whole-Day licence.
Fees
Parking Fees:
Rates vary. The rates charged by the two main public sector operators of car parks are as follows:
Within the CBD: SS0.90 per half hour between 8.30am and 5.00pm
SS0.45 per half hour between 5.00pm and 10.00pm
Outside the CBD: SS0.45 per half hour between 8.30am and 10.00pm
Car owners residing in public housing estates pay S$50 per month for a residential parking permit and S$75
per month if the parking space is in a sheltered parking lot.
Fuel Taxes:
Petrol: S$0.60 per litre or 50% of pump prices, whichever is higher
Off-Peak Cars:
No charge if driven on Sundays, public holidays and between 7.00pm and 7.00am on weekdays, and from
3.00pm on Saturdays. If an off-peak car is used at other times, a valid day licence must be displayed. Five free
day licences are given for each year and additional ones cost S$20 each.
allowed free entry on Sundays and public holidays, between 7.00pm and 7.00am on weekdays, and from
3.00pm to midnight on Saturdays, as well as on five freely chosen days a year. There is a fee of S$20 for each
additional day in excess of the five days. Foreign registered vehicles may purchase monthly permits at S$340.
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May 1997
the Pan-Island Expressway and the Central Expressway in May 1997. Vehicles can use
their ALS licence for entry to the expressways in the morning peak or purchase a separate
licence at a lower tariff (see Table 1).
Electronic road pricing (ERP) is scheduled for implementation in early 1998. The ERP
system will cost taxpayers S$ 197 million to install and S$39 million to operate in the first
five years. The technology will involve a combination of radio frequency, optical
detection, imaging and smart cards. Each vehicle will be fitted with an In-Vehicle Unit
(I VU) on the bottom right of the windscreen (or the centre of a motorcycle handlebar) with
the unit connected by cables to the vehicle's battery. The I VU is an electronic smart card
reader, slightly larger than an audio cassette case. It debits charges from a stored-value
smart card each time the vehicle passes under a set of gantries. The IVU has a Liquid
Crystal Display screen which displays the card's stored value balance and confirms every
transaction with a beeping sound. The IVU will give a long beep when balances are low
or if the card is faulty .The cost of each IVU is estimated at S$100. The IVUs will include
removal-proof features to deter motorists from swapping them among different categories
of vehicles, which will be charged different rates. Foreign motorists may rent temporary
IVUs for their vehicles or install permanent units if they are regular users of Singapore
roads. A smart card currently in use in Singapore is a CashCard launched in November
1996 which can be used at over 500 retail outlets. The ultimate aim is for the CashCard
to be multifimctional so that it can eventually be used at all retail outlets, and for the
payment of telephone calls, bus, taxi and train fares, and ERP tolls. CashCards can be
purchased and topped up at post offices, selected bank branches and automated teller
machines.
ERP gantries will work in pairs. The first gantry has antennae which check the validity
of stored-value smart cards fixed on approaching vehicles. It conducts violation checks,
that is, no smart card or an insufficient balance of stored value. It then executes debiting
instructions to the IVU if everything is in order. The second gantry has a set of vehicle
presence detectors which pinpoints the location of the vehicle and identifies the type of
vehicle by optical means. A second set of antennae (on the second gantry) verifies whether
the correct deduction has been made and also whether the type of IVU corresponds to the
type of vehicle. An out-station controller, located at the side of the road, links the
information from the antennae and vehicle-presence detectors, to check for possible
violations (no IVU, wrong type of IVU, no smart card, insufficient balance in smart card).
If a violation occurs, enforcement cameras mounted on the first gantry record the image
of the rear licence plate of the violating vehicle, and the image and transaction record is
then forwarded to a central computer.
The ERP system to be implemented will have no provisions for alternative means of
payment. The charging points will have no toll booths or lane dividers, and vehicles are
not required to slow down when approaching them. This enables the system to handle
vehicles travelling up to 120 kph in a multi-lane environment. Two gantries are therefore
required at each charging point to allow sufficient time for the IVU to complete its
communication sequences with the smart card, before it communicates with the second
antenna in the transaction process. Given a maximum design speed of 120 kph and a time
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of 400 msec to complete the I VU/smart card sequences, the two gantries have to be at least
such as cluttered configuration, vehicles crossing paths or changing lanes under the
gantries, very close consecutive passings, motorcycles between large vehicles, and very
close parallel passings. Reliability standards have been set at one error in 100,000
passings. An error may involve either not capturing a violating vehicle, or detecting a non
violating vehicle as a violator. It is the latter category of error which is of greater concern
to the authorities, as errors of this nature would erode public confidence in the ERP system.
To avoid confusion to the motoring public when ERP is first implemented, the initial
system is expected to replicate the ALS and RPS, with initial charges comparable to
existing ALS and RPS charges. The Land Transport Authority (LTA) has promised to
cushion the impact of ERP on road users by making offsetting adjustments to other
charges, for example rebates on annual road taxes. ERP is expected to be progressively
extended to cover choke points along expressways, and congested arterial and ring roads
by the year 2000. Over time, ERP charges are expected to rise to "reflect a larger
proportion of the social costs of the congestion caused by road users" (LTA White Paper,
1996, p.35).
The optimal ERP tariff structure will be one which allows for each toll to equal the
congestion externality?the difference between the cost the traveller imposes on society
and the cost he necessarily bears (Morrison, 1986). ERP represents a move towards this
theoretical ideal as compared to the ALS and the RPS. However, the gains from
implementing the optimal tariff structure will ultimately have to be weighed against the
costs of complexity and dissemination of information to the motoring public. The frill
implementation of the ERP will hopefully reduce controls on car ownership significantly
in the long term. However, because the level of car usage is dependent amongst other
things on the level of car ownership, and because of the need to ensure that excessive ERP
charges do not result, ownership controls (whether by way of price or quota) are
inevitable. There is also the need to ensure that there are some uncongested roads that
remain unpriced, lest the whole island be cluttered with unsightly ERP gantries. The
relatively small size of Singapore makes these various problems particularly acute.
Other usage charges include parking fees and fuel taxes (see Table 1). The fuel tax is
sufficiently high to warrant legislation that makes it an offence to leave the country (via
the causeway to Malaysia) in a vehicle which does not have a minimum three-quarter tank
of fuel.
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May 1997
Table 2
Scale of Fees/Taxes for Motor Vehicle Ownership in Singapore (1997)
(S$l is approximately US$0.71)
Customs Duty:
41% of Open Market Value (Cost Insurance Freight, handling and other incidental charges paid)
Registration Fee:
S$ 1,000 for private registration; S$5,000 for company registration
Prevailing
Highest
quota premium*
COEprices
27,220
Small cars (l,000cc or less)
Mid-size cars (1,001 to l,600cc)45,008
53,000
Big cars (1,601 to 2,000cc)
21,446
44,855
49,442
3,350
60,810
2,808
S$
Motorcycles
Open category t
60,888
30,610
S$
51,031
29,602
n/a
S$
* The prevailing quota premium is the average of quota premiums over the past twelve months. The owner
of a 10-year-old vehicle who wants it to remain on the road for another 10 years has to pay the prevailing quota
premiums.
Annual Road Tax ($ per cc):
1,601 to 2,000cc
2,001 to 3,000cc
above 3,000cc
SS0.70
SS0.90
SS1.05
SS1.25
SS1.75
The road tax for a company registered car is twice the above rates, which are for private registered cars. For
a diesel-powered car, a diesel tax which is 6 times the road tax of a similar petrol-driven vehicle is payable.
Off-peak cars enjoy a flat S$800 discount subject to a minimum road tax payment of S$50. B etween May 1997
and April 1998, the government will give road tax rebates of S$20 for motorcyles, S$10 for weekend and off
peak cars, and S$60 for cars and other types of vehicle, to cushion the impact of introducing the RPS on two
expressways.
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Recent Developments in Singapore's Motor Vehicle Policies S-Y. Phang and M. G. Asher
Table 2 Continued
Surcharge on Imported Used Cars:
S$ 10,000 (Note: imported used cars must be under three years old)
S$17,000
Preferential Additional Registration Fee (PARF) Benefit for Deregistering (scrapping or exporting) a
The PARF benefit can be used to offset the additional registration fee of any new car. Imported
and company registered cars are ineligible for PARF benefits.
quota for each quota year (May to April) is pre-announced and determined
makers' expectations of the number of cars which will be scrapped during the ye
as considerations such as the extension of the Road Pricing Scheme and the im
introduction of ERP.
The COE is valid for a ten-year period and can be obtained through electronic
at a monthly tender held by the Land Transport Authority. An interested bidder can
his bid at over 850 ubiquitous automated teller machines. The deposit, equal to
bid, is deducted from his bank account. Successful bidders pay the lowest succ
price in each category (see Table 2). The system delivers the bidding results an
the deposits of unsuccessful bidders within two working days. Successful bidd
then use their COEs to register their vehicles in the same month of bidding. T
per cent of the market value of the vehicle, a 3 per cent goods and servic
registration fee of S$ 1,000, an additional registration fee which is 150 per cen
market value of the vehicle, as well as annual road taxes that vary with the engin
of the vehicle (see Table 2). When the Road Pricing Scheme is extended to
expressways in May 1997, motor vehicle owners will receive rebates on the ann
tax of S$20 for motorcycles, S$10 for weekend and off-peak cars, and S$60 fo
other types of vehicles. An "off-peak" car, which is identified by a red number
be registered at considerable tax savings (see Table 2), but it can only be us
permitted off-peak hours (see Table 1).
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May 1997
The quota system, when first implemented in 1990, resulted in uncertain COE prices
and COEs became a target for speculators, requiring the introduction of various curbs on
and a levy (equal to the positive difference between the COE price at the time of transfer
and the car's original COE price) for car owners who disposed of their vehicles between
the fourth and sixth month after registration (Phang, Wong and Chia, 1996).
As a result of taxes and levies on ownership, a new Toyota Corolla 1.6 (a typical
medium-sized car) with an import value of S$20,000, costs approximately S$ 110,000 (or
US$80,000). Another popular model, the Mercedes Benz E200, with an import value of
S$50,000, costs approximately S$250,000 (US$ 180,000) after taxes and quota premiums.
The Toyota and Mercedes Benz are the two top selling brands in Singapore. The ratio of
the price of a typical medium-sized car to per capita GDP has increased from 3.2 in 1991
to4.5 in 1994 (LandTransport Authority, 1996, p.32). In most high-income countries, the
corresponding ratio is less than one.
The above discussion and information contained in Table 2 illustrate the complexity
of taxes on motor vehicle ownership in Singapore. An argument could be made for taxes
on ownership to be simplified and still achieve the same objective of regulating vehicle
ownership. In fact, since the introduction of the quota system in 1990, the additional
registration fee has been adjusted downwards on two occasions from 175 per cent of Open
Market Value to the present 150 per cent. However, the substitution of other taxes by the
COE bid affects the final prices of newly-registered cars and hence all used car prices. As
the car is a significant asset for most car-owning households, policy-makers have had to
take into account the effect of such tax substitution on used car prices.
per cent of total operating revenue of the government. Among the most important
contributors were: Vehicle Quota Premium or revenue from the sale of Certificates of
Entitlement (COEs); Additional Registration Fee (which essentially acts as an additional
import duty on motor vehicles); and annual road tax and excise duties on petroleum
products. Revenue from Vehicle Quota Premium is substantial but fluctuates with COE
prices. This has implications for fiscal marksmanship.
1 With the establishment of the Land Transport Authority in September 1995, New Registration Fees,
Transfer Fees and Area Licences (see Table 3) have become off-budget items. Comparable data from the LTA
are not available to form a complete picture.
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Table 3
Motor Vehicle Related Taxes and Levies in Singapore
(Figures in parentheses refer to proportion of GDP)
FiscalYear 1992/93
Category
Amount
Total
Tax
Total
Operating
Revenue Revenue
S$ million
Total Tax Revenue
14,237.1
100.0
17,772.4
124.8
3,449.7
24.2
309.7
887.5
821.2
630.8
87.5
52.1
2.2
6.2
Road tax
Area licences
Excise and import duties
on petroleum products
Othersb
80.1
16,223.7
100.0
78.5
20,655.5
127.3
100.0
4,721.8
29.1
22.9
418.1
2.6
9.7
2.0
7.6
(17.2)
100.0
(21.9)
(4.3)
Revenue Revenue
S$ million
(17.6)
(21.9)
19.4
(5.0)
1,144.0
693.4
95.0
4.3
0.6
47.4
38.7
4.4
0.6
0.4
0.3
0.3
1.7
5.0
4.6
3.5
0.5
0.3
0.3
0.2
557.2
3.9
17.6
0.1
5.8
1,574.1
7.1
5.5
0.4
46.8
0.4
0.3
3.4
0.5
0.3
0.3
0.2
3.1
598.6
3.7
2.9
0.1
22.5
0.1
0.1
70.2
59.1
Source: Calculated from Republic of Singapore's Budget Documents for various years.
a The data exclude parking fees which incorporate a high regulatory tax component.
b This category includes revenue from traffic offences, sale of registration numbers, passenger vehicle seating fees etc.
When the ERP is implemented in 1998, the government is expected to make offsetting
adjustments to the motor vehicle quota as well as other taxes and charges, such as road
taxes. However, neither the ERP charges nor the offsets have so far been announced. The
introduction of the ERP is thus expected to change the composition of motor vehicle taxes
and charges, but not to lead to a reduction in their revenue importance. If anything, their
importance is likely to increase.
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May 1997
Motor vehicle taxes and charges are not earmarked for either road or transport
development. They form a part of the general revenue of the government. This permits
greater flexibility in allocating budgetary resources to areas of priority.
As businesses also pay motor vehicle taxes and charges, though their share is difficult
to determine, the cost of conducting business in Singapore is also affected. This needs to
be borne in mind in setting taxes and charges. It also has implications for the economic
incidence of motor vehicle taxes.
While urban transport policies in Singapore are not targeted specifically to address
environmental concerns, they have a direct impact on the environment. Levels of carbon
monoxide, sulphur dioxide, nitrogen oxide, smoke levels and th? average lead concentra
tion in Singapore are all within US Environmental Protection Agency standards. The level
References
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Lew, D. Y., J. Lee and A. P. G. Menon (1994): "Electronic Road Pricing in Singapore: Demonstration
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Morrison, S. (1986): "A Survey of Road Pricing". Transportation Research A., 20A, pp.87-97.
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220
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