SINGAPORE - Motorists and fleet owners paid $7.26 billion in vehicular taxes and certificates of entitlement (COE) in the 2023 financial year – 22.4 per cent more than the previous year.
This is the largest combined amount in at least six years, based on figures released by the Finance Ministry for Budget 2024.
The increase is likely to have been driven largely by a sharp rise in COE premiums, as well as more punitive taxes for premium and luxury cars.
For financial year 2024, the Government expects combined revenue from vehicle taxes and COE to rise by 4.1 per cent to $7.56 billion.
COE prices began an almost uninterrupted climb in 2022 on the back of a seasonally tight supply of certificates, a zero growth policy and an expanding private-hire transport sector.
They reached a record $106,000 for smaller, less powerful cars and $150,001 for bigger, more powerful models in October 2023. These were more than double their respective prices in 2021.
In Budget 2023, the Additional Registration Fee (ARF), or the main car tax, was raised for costlier cars for the second year in a row. A tiered system imposes as much as 320 per cent tax on the portion of a car’s open market value (OMV) – or its approximate cost before taxes – exceeding $80,000.
At the same time, the Preferential Additional Registration Fee (Parf or scrap rebate) was capped at $60,000.
For financial year 2023, revenue from COE rose by 23.9 per cent to $4.66 billion, while vehicle tax revenue grew by 20 per cent to $2.6 billion.
The latter does not include excise duty and goods and services tax, which vehicles are subject to.
COE and vehicle taxes contributed to 7 per cent of the Government’s operating revenue of $104.3 billion in 2023, up from 6.5 per cent in 2022.
For financial year 2024, the Government expects COE revenue to rise by merely 1.3 per cent to $4.73 billion.
This is presumably on the back of a larger supply of COEs, offset by softening COE prices.
It expects vehicle tax revenue to increase by 9.3 per cent to $2.84 billion, as a bigger supply of COEs translates to more vehicles being registered.
