Budget 2017: Taxes on diesel vehicles restructured based on usage

Budget 2017: Taxes on diesel vehicles restructured based on usage

Finance Minister Heng Swee Keat says the Government will restructure diesel taxes to focus on usage and volume, instead of continuing with the current lump sum special tax on diesel vehicles.

SINGAPORE: There will be immediate changes to how diesel will be taxed in Singapore, and these were outlined by Finance Minister Heng Swee Keat in his Budget speech on Monday (Feb 20).

Mr Heng said that there are lump-sum special taxes currently levied on diesel vehicles regardless of the amount of diesel used.

With the restructuring, the Government will introduce a volume-based duty at S$0.10 per litre on automotive diesel, industry diesel and diesel components in biodiesel.

Diesel taxes infographic

"Taxing diesel according to usage incentivises users to reduce diesel consumption," he explained in Parliament.

He noted that apart from carbon emissions, diesel emits highly pollutive particulate matters and nitrogen oxides which are associated with an increased risk of lung cancer and respiratory infection. Citing the examples of other major cities such as London, Paris and Rome, he said these have been enveloped in smog and are now introducing measures to curb diesel emissions.

"Singapore must learn from these hard lessons," he said.

Additionally, Mr Heng announced that he will permanently reduce the annual special tax on diesel cars and taxis by S$100 and S$850 respectively. These changes will take effect on Monday, he said, adding that he "strongly urged" taxi companies to pass on the reductions to their taxi drivers.

To help businesses adjust, Mr Heng said he will introduce 100 per cent road tax rebates for a year and partial tax rebates for another two years for commercial diesel vehicles.

Additional cash rebates will also be given to diesel buses ferrying school children, the minister said, adding that the first year's rebates will more than offset the diesel duty incurred during the same period.

Source: CNA/kk