Impact of Carbon Tax on Petrol and Diesel Pump Prices

Mr Leon Perera asked the Minister for Transport (a) what is the impact of the carbon tax on pump prices for petrol and diesel; (b) whether the Ministry has studied the impact of increasing petrol duties on miles driven and traffic by each type of vehicle in Singapore; and (c) if so, what are the results of these studies.

Mr S Iswaran: To encourage users to manage the use of petrol and diesel, the Government levies excise duties on these fuels. Carbon tax is levied on large direct emitters like petrochemical and power generation companies.

The Ministry has not conducted a detailed study on the impact of increasing petrol excise duty on vehicle usage, since LTA does not track individual driving behaviour. That said, a higher petrol excise duty, which tends to be structural, sends a price signal and aims to discourage the use of petrol vehicles, given the negative environmental externalities.