Green tax break for CNG cars: Call for firm ruling

Straits Times 29 Jul 08;

PLAYERS in the compressed natural gas (CNG) industry are lobbying for certainty in a tax policy governing cars that use the cleaner-burning fuel.

These vehicles are currently exempt from a so-called 'special tax' that applies to vehicles that do not use petrol. For diesel cars, it starts at $1,250 a year.

If not for this exemption, CNG cars would be taxed more heavily than petrol cars.

The exemption was introduced six years ago to encourage people to switch to greener vehicles, and expires at the end of next year.

There are more than 1,600 CNG vehicles on the road today, triple last year's number.

Motor traders, CNG retailers and companies that convert petrol-driven cars to run on the fuel are lobbying for a long-term policy - preferably one in favour of CNG.

'If the Government really wants to encourage environmentally friendly vehicles, it should not impose the special tax,' said Mr Johnny Harjantho, managing director of CNG-refuelling company Smart Energy.

The Land Transport Authority would only say that 'a review will be conducted in due course'.

At the same time, it is leaving the door open for an extension to the tax break.

A spokesman said the review would take into account, among other factors, the environmental benefits of such vehicles.

Earlier this month, the Vehicle Traders Association and the Automotive Importers and Exporters Association met ministries and government agencies over the fate of the special tax on CNG.

Mr Neo Nam Heng, who heads both associations, said: 'We were pushing for certainty so people can decide clearly whether they will buy a green car.'

Mr Gilbert von der Aue, sales manager at C. Melchers, a company that converts cars to use CNG, said: 'Even if the Government extends the exemption by another two years, it is not going to help much.'

He said car buyers and gas sellers have made 'long-term' investments in the fuel.

Shipping executive Agus Kassim, 44, who drives a bi-fuel Toyota Estima, said a tax would be 'unfair to owners because we are supporting a policy to go green'.

CHRISTOPHER TAN