Green cars cost $155m in tax breaks

Christopher Tan The Straits Times AsiaOne 8 Aug 14;

SINGAPORE - A scheme to encourage consumers to buy "greener" cars has resulted in tax breaks for far more cars than the Government expected.

In the first 18 months of the Carbon Emissions-based Vehicle Scheme (CEVS), nearly 60 per cent of new cars sold qualified for the tax breaks.

Cars are entitled to the tax breaks if their carbon emissions fall under a certain level.

The rebates, ranging from $5,000 to $20,000, translated to more than $155 million in taxes forgone - three times more than envisaged.

When the scheme started in January last year, the Government expected only 20 per cent of cars to qualify, which would have translated to $34 million in cost a year. That amount is double what the preceding Green Vehicle Rebate scheme cost.

According to the Land Transport Authority (LTA), close to 20,000 cars registered between January last year and June this year - out of a total of about 34,000 - were eligible for carbon incentives.

Given these higher-than-expected numbers, motor industry players expect the LTA to tweak the scheme soon.

An LTA spokesman said the current scheme ends in June next year. "We will need to observe the full impact of CEVS before making refinements, but a review will be conducted before then."

Observers said the scheme should be changed to make it more meaningful and stricter.

Motorist Ng Tzong Sheng, 36, said the current incentives were not always tangible or transparent to consumers because they were "packaged" in the car's selling price.

"As a motorist, I prefer rebates in the form of a road tax discount or waiver," he said.

In other countries, green vehicles are accorded benefits such as exemption from congestion pricing, use of high-occupancy vehicle lanes, and even income or corporate tax breaks.

Dr Park Byung Joon, an urban transport management expert at SIM University, said he was not surprised by the high number of models qualifying for CEVS. "Efficient technology is expensive, and most of the cars sold today are premium or luxury brands."

Indeed, all of Mercedes' new C-Class cars qualify, as do many of its E-Class executive models. Even the S-Class limousine has two variants which qualify.

Dr Park added that the current scheme was "too lax".

"The intention of the Government is good, but is the scheme meaningful enough?" he asked, adding that the scheme should be reviewed.

Mr Vincent Ng, product manager at a Honda agent, noted that some car models are declared with identical emission levels despite having material differences such as wheel and tyre sizes. Larger wheels and tyres are usually less efficient than smaller ones.

"While it is hard to ensure end users do not modify their cars after taking delivery, the authorities should be more stringent at the point of registration," he said.
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