Diesel car tax: Will it be axed after 2009?

Levy may be cut further or removed once Euro V standard is used here
Christopher Tan, Business Times 19 Feb 08;

THE Government is likely to continue taxing diesel cars more heavily than their petrol counterparts, at least till 2010.

The Land Transport Authority announced on Friday that the annual supplementary tax for Euro IV diesel cars, which are considered more pollutive than petrol models, will be slashed from July. Despite that, the tax will still prove too high for most car buyers to consider a switch to diesel power.

Currently, the tax is four times the annual road tax of an equivalent petrol car. But, from July 1, it will be cut to $1.25 per cubic cm of the car's engine displacement.

That works out to be $2,500 for a 2,000cc car, down from $4,856 now. The road tax for a 2,000cc petrol car is now $1,426, but this will be cut by 15 per cent in July, when electronic road pricing coverage expands.

But diesel cars could have their day in the sun some time down the road.

The Straits Times understands that the tax will be cut further or done away with when the Euro V emission standard is implemented here. Europe is expected to embrace the Euro V standard by late next year. Singapore is likely to follow suit a year or two later.

The Euro V standard for diesel cars is more stringent than the Euro IV one currently in place here. For instance, it stipulates that the amount of fine soot leaving the tailpipe should be no more than 5mg per km, down from the 25mg per km allowed under Euro IV.

Diesel cars complying with the Euro V standard would then be emitting the same amount of fine soot as petrol cars.

Environment and Water Resources Minister Yaacob Ibrahim said yesterday that Euro V diesel cars 'will be neutral with petrol in respect of emission standards'.

Dr Yaacob, who was speaking to reporters at the opening of a new compressed natural gas (CNG) refuelling station in Mandai Link, said: 'We are keen on Euro V, but it's not available yet.

'Our position is that, when all vehicles move to Euro V, it will solve our PM2.5 problem,' he added. 'PM2.5' refers to particulate matter, or soot, 2.5 microns or smaller in size, which is a health hazard.

The new CNG station, which is run by Smart Energy, has 10 nozzles and can refuel about 100 vehicles an hour. This is five times the capacity of the only other CNG station on the mainland, SembGas' CNG kiosk in Jalan Buroh.

Smart Energy will open a second station in Serangoon North in the third quarter and may open another in Jurong later on.

Dr Yaacob also said the green vehicle rebate, which is equivalent to 40 per cent of a car's Additional Registration Fee, is 'working well', as there are about 1,000 hybrid and 500 CNG cars here. The rebate is valid till the end of next year and 'we will review it then', he said.