Govt pushes for electric vehicles to phase out petrol, diesel vehicles
By 2040, petrol and diesel vehicles should have vanished from our roads as the government plans to phase them out.
To help this become a reality, Deputy Prime Minister Heng Swee Keat laid out a series of measures to make electric vehicles (EVs) more attractive in his Budget 2020 speech yesterday.
These will take effect next year and will aid in efforts to address climate change.
Mr Heng said: "The domestic transport sector contributes a significant amount of greenhouse gas emissions.
"For both public health and climate change reasons, we should progressively phase out the use of ICE (internal combustion engine) vehicles."
First, the Vehicular Emissions Scheme, which was introduced in 2018 and distributes tax rebates and surcharges based on a vehicle's emission levels, will be extended to light commercial vehicles.
For cars and taxis, the government will provide an additional EV early adoption incentive, where those who purchase fully electric cars and taxis will receive a rebate of up to 45 per cent on the Additional Registration Fee, capped at $20,000.
This incentive will be available for three years, starting in January 2021.
The Land Transport Authority (LTA) said this will lower the upfront cost of an electric car by an average of 11 per cent and narrow the upfront cost gap between electric and ICE cars.
Electric cars are considerably more expensive, the authority added.
The road tax for EVs and some hybrids will also be revised to be less punitive.
Secondly, public charging infrastructure for EVs will be improved, from 1,600 charging points now to 28,000 by 2030.
Third, the Government will also actively source and use cleaner vehicles, Mr Heng added.
He stressed, however, that this transition towards EVs will have a significant impact on Singapore's tax revenues, particularly in the area of fuel excise duties, which are a significant contributor to government revenue.
He said that fuel excise duties yield around $1 billion a year, and because EVs do not require petrol or diesel and therefore do not pay fuel excise duties, Singapore will need to update our tax structure to accommodate this. This will be done through a tax.
The government will impose an additional tax of $700 a year for fully electric cars, as it works towards implementing a usage-based tax system on EVs in place of fuel excise duties.
To cushion the impact, the Government will phase in this additional annual tax over three years, starting at $200 a year in 2021, then $400 in 2022, and the full sum of $700 from 2023 onwards.