CARS FITTED WITH SAFETY DEVICES (Rebates on import duty)

Mr Low Thia Khiang asked the Minister for Communications whether he will consider giving rebates on import duty on cars fitted with safety devices such as anti-lock braking system and airbags.

Mr Goh Chee Wee (for the Minister for Communications): Sir, with rapid advancement in technology and rising expectations, cars have become increasingly sophisticated. Nowadays, a car comes with numerous fixtures, accessories and gadgets to make the journey safer, more comfortable and less harmful to the environment. For example, catalytic convertors and fuel injection mechanisms make the car less pollutive; a tougher shell and windscreen make the car safer; even bumpers, rear view mirrors and side mirrors help to prevent or lessen the impact of accidents, and so on. Most of these items have become standard features of the modern car.

The development of ABS and airbags is part and parcel of the development of the automobile technology. If we give rebates on ABS and airbags, we should also do likewise for the fixtures, gadgets and accessories I mentioned earlier. While this is theoretically possible, in practice, the distinction between an essential safety device and a desirable but not essential gadget is grey. It is therefore more practical to base the import duty on the total value of the car.

The progressive nature of the import duty and the ARF, which are proportional to the OMV of the car, might cause some distortion in demand for safety features like ABS and airbags. But this is mitigated by the COE system, which does not depend on the price of the car.

While we should encourage the use of safety devices like ABS and airbags, we must not lose sight of our broader objective of managing congestion on our roads. Traffic which is free-flowing , roads which are well planned and good driving habits and effective enforcement all contribute towards road safety.

Mr Low Thia Khiang: Does the Minister of State agree that safety features like ABS and airbags are not actual parts of a car? Many car dealers refuse to bring them in because they will jack up the sale price of the car. Therefore, they are not encouraged to provide cars with these safety features.

Mr Goh Chee Wee: The ABS and airbags are additional features of a car introduced by the car manufacturers. The car distributors have been bringing in cars fitted with these features. Some of the best selling models are actually cars fitted with these safety devices.

Mr Low Thia Khiang: Does the Minister of State agree that many car dealers choose not to install these safety devices such as airbags and ABS because they will jack up the price of the car as they are subject to import duty?

Mr Goh Chee Wee: I think it is the choice of the individual. These are additional features. The car distributors and car dealers will have to sell their cars and they have to explain to their buyers that it is a good car, a good product, and it is worth paying a bit more for a car which is safer. This is marketing.

Mr Low Thia Khiang: Does the Minister of State not agree that if we were to give a rebate to encourage car dealers to bring in cars with such safety devices, Singaporean drivers will enjoy higher safety standards?

Mr Goh Chee Wee: As I have explained in my main answer, we have those features which we consider are essential safety devices, like the seat belt, for instance. The Government has legislated the installation of seat belts. But for other safety features which we consider desirable but are not essential, we will not legislate, but we will encourage their usage. And it does not mean that the Government must give a tax rebate or incentive to encourage the installation of these safety devices.

Dr Kanwaljit Soin (Nominated Member): Sir, would the Minister of State agree that the open market value of the car goes up if the car comes with added features like airbags, etc? That is why car importers leave them out purposely so that the open market value is lower, so that the ARF and the taxes are less. Would the Minister of State therefore agree that by giving some tax concessions, this would be a positive way of encouraging the use of these safety features by the consumer?

Mr Goh Chee Wee: As I have explained earlier, the so-called disadvantage of incorporating these safety devices which make the car costlier is mitigated by the COE system, which does not depend on the price of the car. As I have also explained earlier to the question raised, the Government encourages the installation of these safety devices, but with the advancement in technology, there will be new features introduced into a car. And it does not mean that every time a new safety device is invented and fitted into a car, the Government must give rebates for the installation of these devices. I think we should not lose sight of our overall objective, ie, all these tax measures essentially are to restrain the rapid growth of the car population. I do not think we should lose sight of this objective.