CUSTOMS (AMENDMENT) BILL

Order for Second Reading read. 3.35 p.m.

The Minister for Finance (Mr Hon Sui Sen): Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time."

The present import and excise duties on petrol are specific in nature. They are $3.60 per decalitre for premium petrol and $3.45 per decalitre for regular petrol. The duties on petrol have not been increased since January 1976 although prices of petrol have gone up significantly.

Although it was announced on 6th March 1981 in the Budget Statement that specific duties on petrol would be replaced by an ad valorem duty of 40%, the new duty could not be implemented without suitable amendments to the Customs Act.

Under the existing Section 22(1) of the Customs Act, the value of any imported goods for customs duty purposes is the normal price that the goods would fetch on a sale in the open market between buyer and seller independent of each other. Clause 3 of the Bill seeks to exclude petrol from this mode of assessment.

Clauses 4 and 6 of the Bill provide the basis for ascertaining the value for customs duty purposes of imported and locally-manufactured petrol. The value of any grade of petrol bearing a trade mark or trade name shall be taken to be the price for that grade and trade mark prevailing at the retailers' pump at the time when customs duty becomes payable. In the case of uncustomed petrol or where there is variation in the price of a grade of petrol of the same trade mark, the highest price, inclusive of customs duty, for that grade and trade mark shall be taken to be the value for the purpose of customs duty. The value of any grade of petrol which is not of a trade mark being retailed in Singapore shall also be the highest price, inclusive of customs duty, for that grade regardless of trade mark. If there is any doubt on retailers' pump price, the Director-General is empowered to decide and fix the price.

Clause 5 of the Bill caters for the free trade zone at the Singapore Changi Airport. It allows an authority administering a free trade zone or any person authorized by the Director-General of Customs and Excise to remove, without customs permit, dutiable goods from an aircraft into a free trade zone in a customs airport, to be directly tran-shipped from the free trade zone to another aircraft at the same airport.

Sir, I beg to move.

Question proposed.

Mr Tan Soo Khoon (Alexandra): Sir, I rise in support of this Bill and would like to draw the attention of this House to a particular provision.

Clause 4 of the Bill seeks to change the mode of valuation of petrol duties from the present fixed rate to a percentage based on petrol pump prices. Presently fixed duties on petrol are 36 cents per litre for premium grade and 34.5 cents per litre for regular. Following this, petrol duties will be at 40% of pump prices as stated by the hon. Minister earlier.

With this proposed change, we can expect that petrol duties will go up by an additional 12 cents for premium petrol and nine cents for regular petrol.

It is unlikely that oil companies will absorb these increases in duty. In fact, they will be passed on to the motorists. As a result motorists in Singapore can expect to pay $1.19 per litre for premium grade and $1.08 for regular grade petrol.

Present prices are already expensive enough. With the additional duties, Singapore will be one of the most expensive places in the world to buy petrol, notwithstanding the fact that it has one of the biggest refineries in the world. People in Hongkong pay the equivalent of only 85 Singapore cents per litre. In the United States where prices differ from city to city, the average retail price is only about 82 Singapore cents per litre for premium grade. Our friends across the Causeway pay only 92 Singapore cents per litre for regular and 98 Singapore cents per litre for premium grade, What is the justification of the Government to increase the cost of petrol to motorists in Singapore? At a time when OPEC is reducing the price of oil owing to a decline in global demand and a glut in supply, it seems that the advantage of such a situation is not being passed on to Singaporeans, and instead the Government is seeking to raise the prices of petrol in Singapore. Even stranger must be the fact that this latest move runs counter to the Government's position that prices of oil products must reflect world market conditions. Pump prices were decontrolled about three years ago, so that consumers could pay according to world-wide rates. Now at a time when prices are falling or stabilizing, the Government chooses to increase the cost of petrol to Singaporeans.

In the end it is not only the hard-pressed motorist who suffers. Everyone knows what happened the last time petrol prices went up by a substantial amount. Everything else followed suit. There would always be those who would be the first to increase their prices thereby causing further difficulties to Singaporeans, particularly those in the lower income group. With the inflation rate running around 8% this year, can we afford any round of Government-induced price increases?

A survey was made recently by the Automobile Association of Britain on the cost of owning a car in various countries around the world. In this list of countries which included developed countries like the United States, Japan and Great Britain, Singapore was placed the second most expensive country in the world to own a car. With the astonishingly high duties and taxes one pays just to own a car, our unenviable position on this list is not surprising. And it will not be surprising if, with the passing of this Bill, Singapore succeeds in making it to the top of this unflattering list.

Mr Hon Sui Sen: Sir, the points which the Member for Alexandra has made are all points which motorists, among whom I number myself, will appreciate. The fact is that there will be an increase in pump prices. The exact increase will depend, of course, upon how much the petrol companies will absorb the increase in duty. For a motorist using 30 gallons a month, the increase will most probably be about $15 a month. However painful it is to pay more tax, I do not feel that motorists can consider this increase an intolerable burden.

I must remind the Member that the principle of this Bill and of this increase was accepted by the House at the time of the debate on the Budget statement. I made it clear in my speech just now on the Second Reading that this Bill is intended to implement one of the measures in the Budget for this year. If it is any consolation, the Member would like to know that as this Bill comes up before the House only at this stage, motorists have had the benefit of having already saved many months of additional tax.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. - [Mr Hon Sui Sen].

Bill considered in Committee; reported without amendment; read a Third time and passed.