'HALF-TANK' RULE (Relaxation)

Mr Chng Hee Kok asked the Minister for Finance if he will relax the `half-tank' rule so that oil companies do not have a protected market.

The Minister of State for Finance (BG George Yong-Boon Yeo) (for the Minister for Finance): Mr Speaker, Sir, on behalf of my Minister.

Members would recall that the half-tank rule was introduced on 17th April last year to ensure that cheaper Johor petrol would not undermine our use of petrol tax as a means of curbing car usage in Singapore and to reduce the associated loss of duty on petrol purchased outside Singapore. The half-tank rule was chosen from amongst several alternatives as a measure which would not discourage Singapore motorists from visiting Johor.

After 16 months of operating experience, the Finance Minister is satisfied that the half-tank rule has worked satisfactorily in achieving our objectives. Statistics at the Woodlands Checkpoint show that the introduction of the half-tank rule has not reduced the flow of Singapore-registered cars into Johor. For the period January to July this year, the average daily outflow of Singapore cars was 7,100 compared to an average of 6,800 before the rule was introduced.

The Government is happy to see Singaporeans visit Johor for their shopping and leisure in order to take advantage of the lower prices there but the half-tank rule cannot be relaxed until a better alternative is found to achieve the same objectives.

As to the question of whether the oil companies operate in a protected market, which I believe is really at the bottom of Mr Chng's question, the Minister for Trade and Industry will answer this fully in his reply to the next two questions.

Mr Chng Hee Kok: Sir, will the Minister of State consider supplementing the half-tank rule with a half-tank petrol tax, so that consumers are free to purchase petrol wherever they like?

BG George Yong-Boon Yeo: The alternative of an exit levy, or whatever we want to call it, was seriously considered when the proposal was being formulated last year. We did not implement it because it would have been misconstrued as an exit tax, as a policy to discourage Singapore motorists from visiting Malaysia. So for that reason, we adopted the indirect approach of the half-tank rule. The effect is largely the same. For each approach, there are pros and cons, but since the half-tank rule has worked well and the dust has settled, we should stick to it. But at the same time, we still keep open the alternative of an exit levy for the future should new needs compel us to re-evaluate our position.

Mr Chng Hee Kok: Sir, the exit tax on petrol which I am suggesting is not the same as the exit tax in other countries. Can the Minister confirm that the exit tax in other countries apply to individuals? Here Singaporeans who go to Johor on foot, by bus, or by rail, are not penalised at all under the half-tank tax.

BG George Yong-Boon Yeo: Mr Speaker, Sir, though Mr Chng is logically correct, I do not think the public perception would be as generous.