Budget 2012: Transport
20-Feb-2012
In his Budget 2012 Speech, Finance Minister Tharman Shanmugaratnam announced several initiatives to enhance our transport system. First, the government will partner the public transport operators to boost the number of buses to 800 over the next five years. This is a significant increase in bus capacity and will help to reduce crowding and waiting times.
Changes will also be made to the vehicle tax regime. A new Carbon Emissions-based Vehicle Scheme (CEVS) will replace the existing Green Vehicle Rebate Scheme (GVR). Car models with low carbon emissions will enjoy generous rebates on their ARF of up to $20,000. The Special Tax for Euro V compliant cars will be lowered from $1.25 per cc to $0.40 per cc from January 2013. The Additional Transfer Fee (ATF) will also be abolished with effect from 18 Feb 2012.
The excerpts of Finance Minister’s speech on transport matters are below.
Transport-related Excerpts from Finance Minister Tharman Shanmugaratnam’s Budget 2012 Speech
Boosting Bus Services
 The Government has decided to make a major commitment to improve bus service levels. We will partner the public transport operators (PTOs) to add about 800 buses over the next five years, or a 20% increase. This is a significant increase. It took the PTOs close to 20 years to grow the public bus fleet by 800 buses in the past.
The Government will provide funding for 550 buses while the public bus operators will add another 250 buses. This significant increase in bus capacity will reduce crowding and waiting times. For example, it will enable almost all feeder buses to run every 10 minutes or less – for two hours during morning and evening peak periods, instead of a one-hour peak currently.
 This is an important new commitment that will stretch beyond this term of Government. To ensure that the Government can fulfil this commitment for both the purchase of buses and the running costs for 10 years, I will set aside $1.1 billion in this Budget for a Bus Services Enhancement Fund.
Beyond this one-time Government commitment to fund 550 buses, the viability of bus operations will have to rest on improvements in efficiency and a sustainable system of fare revenues.
Revisions to the Vehicle Tax Regime
1. New Carbon Emissions-based Vehicle Scheme (CEVS)
The Green Vehicle Rebate Scheme (GVR) was introduced in 2001. Electric and hybrid cars, as well as those running on compressed natural gas (CNG), are given a 40% rebate of their Open Market Value, which is offset against the vehicle’s Additional Registration Fee or ARF.
Ten years on, the take-up of green vehicles remains modest. One drawback of the GVR is that it is based on the technology platform, rather than the actual impact on the environment. Some hybrid vehicles with large engine capacity are in fact not very environmentally friendly, while some petrol cars with smaller engine capacity emit less carbon. We have thus decided to replace the GVR with a new Carbon Emissions-based Vehicle Scheme, or CEVS in short, when the GVR scheme expires at the end of 2012.
CEVS is based on carbon efficiency and will be applicable to all new passenger cars. Car models with low carbon emissions will enjoy generous rebates on their ARF of up to $20,000, while those with high carbon emissions will have to pay a registration surcharge of up to $20,000.
With CEVS, some car buyers will pay less and others pay more, but the Government will collect less revenue overall. CEVS is expected to cost Government $34 million per year, more than double the total annual incentives given under GVR.
For commercial vehicles and motorcycles, we will be extending the GVR by another two years till end-2014. The Ministry of Transport will be announcing more details on CEVS in the COS.
2. Special Diesel Tax for Euro V Vehicles
Last year, the Government announced the adoption of Euro V emission standards for new diesel vehicles by 2014.
To encourage the adoption of new and cleaner diesel technologies, the Special Tax for Euro V compliant cars will be lowered from $1.25 per cc to $0.40 per cc from January 2013, a reduction of 70%. For a 1,600cc Euro V diesel car, this means that the Special Tax payable is comparable to the annual fuel tax paid by an equivalent petrol car.
3. Removal of Additional Transfer Fee
The Additional Transfer Fee, or ATF, is levied on used-vehicle transactions at 2% of the vehicle value at the point of transfer. Arising from feedback from the public and the motor industry, the Government has reviewed and decided that the ATF is no longer necessary. I will therefore abolish the ATF, starting tomorrow. This is estimated to cost the Government $70 million per annum in revenue forgone.
For a full transcript of Minister Tharman’s Budget 2012 Speech, please click here
For more details of the Revision of Special Tax for Euro V Compliant Diesel Cars, please click here
For more details of the Removal of Additional Transfer Fee, please click here
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