Singapore to consider returning cash for scrapped cars

Policy change may help people switch to public transport, says Transport Minister
Christopher Tan, Straits Times 31 Mar 08;

FOR years, the answer has been no.

Now Transport Minister Raymond Lim wants to know if it can be yes.

He has asked the Land Transport Authority (LTA) to see if motorists can get back cash when they scrap their cars.

By scrutinising this sacred cow, he is showing how serious he is about finding ways to persuade people to give up their cars.

He hopes that some who get their money back - and the amount could run to thousands of dollars per motorist - would choose not to buy a new car and switch to public transport instead.

Since 2003, around 80,000 passenger cars have been scrapped each year before turning 10 years old, with the Government refunding the so-called unused portions of the Additional Registration Fee and Certificate of Entitlement.

People have been known to scrap cars as new as two years old, though most do so only after the vehicles turn five years old.

At present, the refunds come as paper rebates which can be used only to buy another vehicle.

Given the number of vehicles scrapped and the youthfulness of many of the vehicles, a change in policy could see the Government refunding $2 billion each year.

Mr Lim said that the LTA would work with the Finance Ministry to see if the change could be made.

'You have to look at our overall objective - to have a decisive shift towards public transport,' he said. 'So we should look at whether we can have any incentive to help people make the shift.'

He was speaking at the launch of the Land Transport Masterplan, a 101-page paper outlining the Land Transport Review which he announced in January. It called for an overhaul of the bus and train systems as well as major changes aimed at car owners.

'As I said when we launched the Land Transport Review, we will leave no stone unturned,' he said. 'So this is one more stone that I'm turning up to have a look at, to see if it can be done.'

Motorists have long asked for rebates to be paid in cash, but the answer always been no. The reason usually given: The rebate is a discount on taxes paid upfront and not meant as a cash refund.

Mr Lim expects a decision on the change within six months.

Among motorists who welcomed the possible change was engineer Shreejit Changaroth, 51, who said: 'I know people with old cars who are not scrapping them simply because they can't use the rebates for anything else but to buy another car.'

Motor traders however, may lose a source of income, because they rake in a significant amount from trading the rebates between those who scrap and those who buy cars.

Mr Raymond Tang, managing director of used car trader Yong Lee Seng, said that this has been a 'business opportunity' for traders for years.

Singapore Vehicle Traders Association president Neo Nam Heng said that cash rebates would be 'fair to car owners', but the impact on traders would be clear only when details are out.

Cash incentive to give up your car?
Lin Yanqin, Today Online 31 Mar 08;

APART from increasing the number of Electronic Road Pricing gantries and reducing Certificate Of Entitlement (COE) quotas, a cash incentive could soon be introduced to encourage motorists to give up their cars.

The Ministry of Transport is studying the possibility of offering COE and Preferential Additional Registration Fee (PARF) rebates in cash instead of credit, to encourage greater use of public transport and manage vehicle population growth.

The idea of giving cash rebates was first raised during the recent Budget debate by MP Inderjit Singh. Over the next four to six months, the Land Transport Authority (LTA) will work with the Ministry of Finance to see if this is feasible, said Transport Minister Raymond Lim at the launch of the Land Transport Masterplan report yesterday.

Pointing out that COE and PARF rebates were currently paid in credits that could only be used when buying another car, Mr Lim said: "The principle motivation behind this review is to provide incentives for someone who says 'I want to give up my car and I'm switching to public transport'".

In spite of past efforts to curb the vehicle population, the rate of increase has outstripped road development. The total vehicle population currently stands at 850,000.

When asked what would stop a person from using the cash rebate to buy another car, Mr Lim responded: "That can happen, I agree. That's why we need to study this carefully to see how best to do this."

Currently, PARF and COE rebates can be used to offset upfront vehicle taxes and fees when one registers a car, such as the PARF, the COE quota premium, the registration fee, and the $10,000 used-car surcharge.

A driver who deregisters his car before the COE expires will get a rebate on the quota premium paid, pegged to the number of months and day remaining on the COE, while PARF is computed based on the age of the car.

For example, a car deregistered nine years before the COE expires will receive $15,221, based on a paid premium of $16,897.

Most motorists opt to buy another car so they don't lose out on these credits.

LTA chief executive Yam Ah Mee said that the suggestion of cash rebates came up frequently during the LTA's feedback sessions with some 4,500 motorists over the past few months.

"If the rebate only used for buying another car, in terms of the number of cars on the road, it may still be the same or even more," he said.

Also launched yesterday was LTA's Community Outreach Programme, which will involve 14 dialogue sessions with grassroots leaders from all constituencies over the next six months to discuss land transport policies and plans that could affect their communities.

Other outreach efforts include site visits and roadshows, as well as a community guide that will outline the initiatives detailed in the Masterplan.

LTA may give cash rebates to persuade more to switch to public transport
Channel NewsAsia 30 Mar 08;

SINGAPORE: The Land Transport Authority (LTA) is considering giving cash instead of credits when one gives up his or her car to persuade more people to opt for public transport.

Transport Minister Raymond Lim said he has asked LTA to work with the Finance Ministry to see if Certificate of Entitlement (COE) and Additional Registration Fee (ARF) rebates can be given in cash when motorists decide to give up their cars.

This study should take about four to six months.

A whole slew of measures was announced from late January on improving bus and rail services to get more people to use public transport. A more extensive ERP system was also set up as part of the deal to keep traffic smooth.

But what kind of push do people actually need to give up their cars?

One idea that has been tossed about and was recently brought up by MP Inderjit Singh during the Budget debate is to give cash incentives.

The current situation is that when a motorist gives up his or her car, ARF and COE rebates are given in terms of credits. In order not to lose out, motorists usually end up using these credits to purchase another car.

Many people have given the feedback that if these rebates are given to them in cash, it would be more of an incentive for them not to buy another car.

But by that same token, motorists could – just as easily – take the cash rebate and purchase another vehicle.

Mr Lim said: "That can happen – I agree. That is why I said we have to study this very carefully. If we are going to do this, how best are we going to do it?"

The transport minister was speaking at the release of the detailed Masterplan report on Sunday, which marks out in detail the announcements made recently and the plans on the road map for the next 15 years, with a simpler illustrated version for the community at large.

The Community Outreach Programme to solve day-to-day problems like parking was also launched on the same day.

Over the next six months, LTA will hold 14 dialogue sessions with grassroots leaders from all constituencies. Efforts like site visits and road shows will also be stepped up at locations where there are major projects like the construction of the Downtown Line.- CNA/so