ADDITIONAL REGISTRATION FEE (Further reduction)

Dr John Chen Seow Phun asked the Minister for Communications whether he will consider a further reduction of the Additional Registration Fee to better allow market forces to determine the price of owning cars since the vehicle quota system is now working well.

Mr Mah Bow Tan (for the Minister for Communications): Mr Speaker, Sir, the vehicle quota system has been effective in controlling the growth in vehicle population. The quota premium reflects the price that car buyers are willing to pay for the ownership of a vehicle given the present rate of taxes for ARF, customs duty and road tax.

If we reduce the Additional Registration Fee for cars further, the reduction will most likely result in higher quota premiums. For buyers of new cars, this will, on the average, make little difference because the increase in COE prices will be offset by the reduction in ARF. However, owners of old cars who wish to extend their COEs will have to pay much more because the prevailing quota premium would now be much higher. This would be disadvantageous to owners of the older cars.

My Ministry will monitor the situation carefully and we would like to see how the quota system works under different economic conditions before changes that would severely affect the quota premiums are introduced.