OFF-PEAK CAR SCHEME

Mr Imram bin Mohamed asked the Minister for Communications (a) how many Certificates of Entitlement have been issued and how many cars have been registered under the Off Peak Car scheme since 1st October 1994; (b) how is the strike price determined and whether the OPC bids influence the strike price; (c) whether an OPC can be converted into a normal car after 10 years, on payment of the quota premium; (d) why a deadline is imposed for conversion of weekend cars to normal cars; and (e) whether the OPC scheme has inadvertently penalised owners of bigger weekend cars and, if so, what is the remedy.

Mr Mah Bow Tan: (a) How many Certificates of Entitlement have been issued and how many cars have been registered under the Off-Peak Car (OPC) scheme since 1st October 1994

The Registry of Vehicles has issued a total of 15,280 Certificates of Entitlement (COEs) since 1st October 1994, excluding those for registration of Category 5 (commercial) and Category 6 (motorcycles) vehicles. As at end December 1994, there are a total of 127 Off-Peak Cars (OPCs), 97 of which are registered new and 30 of which are converted from normal cars.

(b) How is the strike price determined and whether the OPC bids influence the strike price;

There is no special COE category for OPCs. All car buyers will bid for normal car COEs and the strike price will be determined by the lowest successful bids in the respective COE categories. At the point of registering their cars, owners are then required to indicate if they wish to register OPCs or normal cars. If they choose to register OPCs, they will then receive a maximum upfront tax rebate of $17,000 on the net Additional Registration fee (ARF), customs duty and COE premium. In addition, they get a discount of $800 on the annual road tax subject to a minimum road tax of $50.

There is no evidence to suggest that the OPC Scheme has led to higher COE prices. The scheme is designed to help those who can marginally afford to own cars. It will not be in their interest to push up COE premiums, as it will then nullify the tax concessions given to them.

(c) Whether an OPC can be converted into a normal car after 10 years, on payment of the quota premium

An owner can convert his OPC to a normal car anytime during the lifespan of his car, by paying an administrative fee of $800 and refunding the "unused" portion of the upfront rebate, calculated as follows: $17,000 ---------- x (120 months - age of car at date of conversion) 120 months There is no need to pay another quota premium, as the OPC owner has already bid for a COE. The top-up amount to convert an OPC to a normal car is "depreciated" over 10 years and equals to zero when the car is 10 years or older. The prevailing quota premium is payable only if the owner wishes to revalidate the car's COE for another 10 years.

(d) Why a deadline is imposed for conversion of weekend cars to normal cars;

Under the former Weekend Car (WEC) Scheme, owners who wanted to convert their WECs to normal cars were required to obtain a normal car COE. When the WEC Scheme was revised in October last year, to cap the road tax discounts eventually at $800, it was decided to give WEC owners the option to convert their cars to normal cars without having to bid for a new normal car COE. They are required only to pay an administrative fee of $100 and a top-up charge, as follows: (Upfront tax rebate + savings in COE premium (120 months - age of car at point of tender) x at time of conversion) ---------------------- 120 months The top-up charge is pro-rated to the age of the WEC concerned and takes into account the savings in COE premium at the point of tender, and will "depreciate" over time. As this is a concession, owners are given up to end September 1997 to exercise the option. The 3-year grace period to exercise the option will help owners to depreciate their top-up charge. WECs which are not converted to normal cars by the end of the grace period, will remain as WECs until ERP is implemented islandwide. The exact date, which is expected to be beyond year 2000, can only be determined after ERP is implemented. By then, as promised by the Government, WECs will automatically be converted to normal cars at no cost to the owners.

(e) Whether the OPC scheme has inadvertently penalised owners of bigger weekend cars and, if so, what is the remedy.

The WEC Scheme was implemented to help more Singaporeans to own cars. Its tax package was formulated with the intention to help the marginal car owners, who were expected to be the buyers of small or medium-sized cars. The revised WEC Scheme and the new OPC Scheme preserve this intention. There is no justification to allow owners of bigger WECs to enjoy more tax concessions than owners of smaller WECs. It is only fair that all owners of OPCs or WECs, regardless of their engine capacities, be subject to similar usage restraint and be given similar tax concession.