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11.1.5.5. Singapore Road and Vehicle Taxation

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Congestion tolls are among various road and vehicle taxes that Singapore has implemented in an effort to prevent congestion problems such as those affecting large urban areas in neighboring countries. For convenience, the incentive measures can be classified as ownership or use taxes in the following manner:

In addition to import duties of 45% and registration fees of S$1,000 ($710), Singapore imposes an Additional Registration Fee (ARF) based on the market value of the vehicle. The ARF rose from 15% in 1968 to 175% in 1983, before falling to 150% in 1991. The annual road tax is based on the engine capacity of the vehicle. As shown in Figure 11-7, these rates have risen significantly since the early 1970s. The ARF is reduced if an old vehicle is scrapped when a new one is purchased. The intention of this Preferential Additional Registration Fee (PARF) is to discourage ownership of older, high-emitting vehicles and to limit the used car market.

In 1990, Singapore implemented a quota scheme under which vehicle owners are required to have Certificates of Entitlement (COEs). COEs are valid for ten years and can be obtained in public auctions held monthly by the Registry of Vehicles. Owners of vehicles more than ten years old are required to pay the prevailing quota price. The COE requirement enables the government to determine the total number of vehicles in circulation based on the country's road capacity. This program could be considered a trading system such as those discussed below and in Section VI but is included here because it is part of Singapore's package of measures to limit congestion. COE prices have increased rapidly: For cars with a capacity over 2,000 cc, they have risen from S$528 ($375) when they were introduced in 1990 to S$17,600 ($12,500) in 1992 to over S$100,000 ($70,000) in 1994.

An element of congestion pricing was built into the COE system in 1991 with the creation of the Weekend Car scheme under which a separate category of Weekend Car COEs was created. Buyers of Weekend COEs enjoyed tax rebates on the registration fee, import duty and COE premium, up to a maximum of S$15,000 ($10,700). They were also entitled to 70% reductions in road tax. Weekend cars could be used only on Sundays and public holidays and during off-peak hours (between 7 pm and 7 am on weekdays and after 3 pm on Saturdays). Weekend vehicles were clearly marked by red number plates that had to be welded onto the vehicle and sealed by an authorized inspection center. To drive the vehicle outside the authorized times, a S$20 ($14) day license had to be displayed on the windshield. Owners had the right to five free day licenses a year.

One problem with the Weekend Car scheme was that many owners of large vehicles found it cheaper to purchase Weekend COEs but use their vehicles during peak periods, paying the S$20 daily license. To stop this practice, the Weekend Car scheme was replaced by an Off-Peak Car Scheme on October 1, 1994. This scheme operates like the Weekend scheme except that there is no separate category of COEs, the tax rebates have been raised from S$15,000 to S$17,000 ($12,000), and the annual road tax reduction has been set at S$800 ($570).

Like most other countries, Singapore taxes motor fuels. The unleaded gasoline tax is the higher of S$0.6 ($0.43) per liter or 50% of pump prices (including taxes). Leaded gasoline is taxed an additional S$0.15 ($0.11) per liter. Diesel is taxed at S$0.08 ($0.06) per liter. One problem that arose as a result of these taxes was that motorists purchased fuel in neighboring Malaysia, where a liter of gasoline was about S$0.5 ($0.35) cheaper. Singapore countered this practice by requiring all vehicles leaving the country to have their gasoline tanks at least half full in 1989. In 1991, the tank requirement was raised to 3/4 full.

As the main operator of parking facilities, the government also imposes relatively high parking fees. Parking charges within the Central Business District (CBD) are S$0.9 ($0.64) per half hour during office hours. Outside the CBD, charges are S$0.45 ($0.32) per half hour.

The Area Licensing Scheme (ALS) was adopted in 1975 to reduce congestion in the CBD during peak morning hours (7:30-10:15). Cars entering the CBD with fewer than four persons were required to pay a fee that rose from S$3 ($2.1) in 1975 to S$4 ($2.8) in 1976 to S$5 ($3.6) in 1980. When the fee hours were extended to the evening peak period (4:30-6:30) in 1989, the fee was lowered to S$3. Company cars pay twice this rate. The exemption for cars with at least four persons was removed in 1989. Motorcycles pay S$1 ($0.7) per day.

Although officials found that the fees limited vehicle use during peak hours, traffic problems between peak periods increased. As a result, the ALS was significantly modified in 1994 to include two types of licenses: a part-day license at S$2 ($1.4) for entry into the CBD during off-peak hours (10:15 am-4:30 pm) and a whole-day license of S$3 to be used between 7:15 am and 6:30 pm.

As shown in Figure 11-8, the ALS had a large impact on peak-hour traffic, resulting by the end of 1975 in a 71.1% decrease in the num-ber of private vehicles entering the restricted zone between 7:30 and 10:15. Figure 11-9 shows that public transportation became preferred mode of transportation after the introduction of the ALS. The 1989 expansion of the system to evening peak hours resulted in further traffic decreases and increases in average speeds of 10.8% in morning peak hours and 30.4% during the evening peak period.

The COE and other measures are credited with significantly limiting the number of vehicles in Singapore. It has been estimated that without vehicle ownership and use disincentives, the number of vehicles in Singapore would have been 400,000 by 1992 instead of the actual number of 274,000. The U.S. Federal Highway Administration, which has gathered information on traffic management in Singapore and other countries, concluded in a recent article, "The road pricing program, combined with other charges on vehicles ownership, has dramatically reduced traffic and eliminated peak-period congestion in the downtown area. In addition, air pollution has been significantly reduced, and business activities and rents in the downtown area have not suffered." These achievements are in stark contrast to severe traffic problems in other southeast Asian cities, such as Bangkok and Jakarta.

Singapore's vehicle taxes have also raised significant revenues for the government. By 1992, they accounted for 23% of total government tax revenue.

Singapore intends to convert its current manual scheme to an electronic road pricing system by 1997. Electronic tolls will deduct credits from vehicle transponders and notify the authorities of vehicles in violation of toll rules. The same transponder cards will perhaps be usable for public phone calls and other purchases. Toll charges will vary according to type of vehicle and time of day. The government plans to later extend the system to its entire road system.

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