TAX INCREASES

Road Taxes on Motor Vehicles

Finally, I will deal with the tax increases. In my Budget Statement last year, I mentioned the need to restrain the growth of the motor car population in Singapore in order to contain the problem of congestion on our roads.

As a result of the substantial increases in registration fees and road taxes on cars, petrol duty and car park charges since October 1983, the growth of the motor car population was reduced from 12.1% in 1983 to 7.3% in 1984. However, this lower rate of increase is still much higher than the projected increase of about 3% per annum in the road network over the next 3-5 years.

In view of this, I have decided that with effect from tomorrow, road taxes on motor cars and goods cum passenger vehicles will be increased by 15%. The revenue gain for FY 85 is estimated to be $32 million.

Duty on Petrol

I have also decided to raise the ad valorem duty on petrol from 50% to 60% with effect from today. This is one of the most equitable ways of discouraging excessive usage of motor vehicles and is in line with Government's energy conser- vation policy. The gain in revenue in FY 85 will be about $135 million.

Diesel Tax on Taxis

The diesel tax of six times the annual road tax has been levied on diesel-powered private motor cars since 1971. However, no diesel tax is imposed on diesel-powered taxis. Over the years, customs duty on petrol has been increased to restrain the growth of the motor car population. There was no similar increase in duty on diesel. This has resulted in a severe disparity in fuel cost between petrol and diesel operated vehicles.

As diesel-powered taxis do not pay diesel tax, the fuel cost of taxis is unrealistically low compared to that of petrol-powered private motor cars. This is undesirable because taxis take up as much road space as other motor cars.

Therefore, with effect from 1st October 1985, I propose to extend the diesel tax of six times the annual road tax presently applicable only to private motor cars, to all diesel-powered taxis. The revenue gain for FY 85 will be about $37 million.

Details of the above increases in road taxes and consequent increases in taxi fares are set out in the Ministry of Communications and Information's statement (Appendix II (Cols. 507 - 512) which, with your permission, Sir, I will now distribute to Honourable Members, [copies distributed to Members.] Appendix II - MINISTRY OF COMMUNICATIONS AND INFORMATION PRESS RELEASE (Cols. 507 - 512)