CNG-car drivers may have to pay additional tax from 2010

Margaret Perry, Channel NewsAsia 24 Jul 08;

SINGAPORE : A lack of refuelling stations is not the only concern worrying drivers who are considering switching to Compressed Natural Gas (CNG). Drivers of CNG vehicles may have to pay an additional tax from 2010.

Sales Manager Isaac Tan drives 35,000 kilometres a year - much of it for his job.

Earlier this year, he bought a new car and planned to convert it for CNG use, to save fuel costs and the environment.

But he changed his mind at the last minute, because of costs - even though buyers of hybrid and CNG vehicles benefit from the Green Vehicle Rebate. This gives the buyer a 40 per cent discount on the car's Open Market Value until 31 December 2009.

Mr Tan said, "I was surfing... the LTA website, ONE.MOTORING, and I realised there is this Special Tax involved on CNG. Right now, the government has waived it until 31 December 2009, but beyond that it's unclear."

Recovering fuel duty and discouraging the use of polluting vehicles are reasons for the Special Tax.

Currently drivers of petrol vehicles pay duty of 41 cents per litre of intermediate grade petrol every time they top up their tanks.

So the owner of a 1,500cc petrol car who drives the average 21,000 kilometres a year spends about S$3,550 on petrol, of which about S$660 is petrol duty.

But duty is not charged on diesel or CNG at the filling station.

And diesel engines create more pollution. For example, the latest EURO IV diesel engines create five times more of the pollutant called PM2.5 than a petrol-driven car.

Special tax for EURO IV diesel vehicles is pegged at S$1.25 per engine cc. So the owner of a 1,600cc diesel vehicle pays S$2,000 a year in Special Tax.

The owner of a 1,600cc diesel vehicle who drives the average 21,000 kilometres a year would spend about S$1,900 a year on diesel.

But CNG vehicles produce cleaner emissions than petrol vehicles, so are exempt from Special Tax until 31 December 2009.

The Land Transport Authority (LTA) has not yet decided whether to extend the exemption. But it said if Special Tax is imposed on CNG cars, it will not necessarily be the same as that on Diesel IV vehicles.

Mr Tan said: "The way the government is setting the policies - or not setting the policies, rather - is not helping the public. And in fact, if they really want to encourage the public to go to greener vehicles, then they should set the policies right in the first place."

LTA said it will announce its decision on the Special Tax for CNG cars in due course. So for now, drivers considering a CNG vehicle will have to live with the uncertainty of higher taxes in future or wait until a decision is made. - CNA/ms