SINGAPORE — From January next year onwards, drivers who purchase fully electric cars and taxis will receive a rebate on their additional registration fee, as the Government pushes for the adoption of cleaner and more environment-friendly vehicles.
Under an early adoption scheme for electric vehicles, buyers will receive a rebate of up to 45 per cent on the additional registration fee, capped at S$20,000, Deputy Prime Minister Heng Swee Keat said in his Budget speech on Tuesday (Feb 18).
Mr Heng, who is also Finance Minister, said that the move is part of Singapore’s efforts to fight climate change, and one way to do that is by managing Singapore’s transition to a low-carbon, low-emissions economy.
The Government will also move to expand the public charging infrastructure for electric vehicles, from 1,600 today to about 28,000 by 2030.
“We are placing a significant bet on electric vehicles and leaning policy in that direction because it is the most promising technology,” he said.
“Our vision is to phase out ICE (internal combustion engine) vehicles and have all vehicles run on cleaner energy by 2040,” Mr Heng said, as he highlighted three measures in this year’s Budget that hopes to attain this goal.
1. Enhancing incentives to encourage early adoption
Mr Heng said that the Vehicular Emissions Scheme (VES) that was introduced for cars and taxis in 2018 proved effective in nudging car buyers and taxi operators to opt for cleaner car models with environment-friendly engines such as electric hybrids.
Under the scheme, car buyers and taxi operators who choose cleaner car models can receive an upfront rebate of up to S$20,000 and S$30,000 respectively.
Mr Heng said that the Government will now provide an early adoption incentive for electric vehicles. Those who fully purchase electric cars and taxis will receive a rebate of up to 45 per cent on the additional registration fee — capped at S$20,000.
This incentive will be introduced from January 2021, for a period of three years.
On top of that, a Commercial Vehicle Emissions Scheme for light goods vehicles will be introduced.
Mr Heng did not elaborate further, saying that it is similar to the VES for cars and taxis. Details will be announced by Mr Masagos Zulkifli, Minister for the Environment and Water Resources, in the coming weeks.
2. Upcoming revision in road tax methodology for cars
Mr Heng said that the Government will revise the road tax methodology for cars from January 2021 in an effort to better reflect the current trends in vehicle efficiency.
“This will lead to an across-the-board reduction in road tax for electric vehicles and some hybrids,” he said.
He added that the transition towards electric vehicles will have a big impact on tax revenues.
Fuel excise duties today yield S$1 billion a year and form a significant contribution to Government revenues, Mr Heng said.
“They are also a form of mileage tax, which discourage excessive driving, especially in private cars, and thus helps to reduce road congestion.”
However, there are no fuel excise duties for electric vehicles.
“Ideally, we would like to implement a usage-based tax on these vehicles as an alternative to fuel excise duties.
“But the technology to do this properly is the Next Generation ERP (electronic road pricing) System and distance-based charging using ERP is still several years away.”
In the interim, the Government will impose a lump-sum tax that will be built into the road tax schedule for electric vehicles to partly account for the loss in fuel excise duties.
This will be introduced over the span of three years, starting from January next year. The full quantum will kick in by January 2023.
“Total road tax, after the revision in methodology and the new lump-sum tax, will be higher for some electric vehicle models,” he said.
“However, buyers can expect to enjoy substantial cost savings because of the significant early adoption incentive.”
3. Expanding public charging infrastructure for electric vehicles
To date, there are around 1,600 charging points island-wide, he said. This number is set to jump significantly by 2030 to 28,000 chargers at public car parks island-wide.
He added that the Government will take the lead and progressively procure and use cleaner vehicles to do their part for the environment, and there will have to be a significant increase in demand to justify the infrastructure investment.