Government Imposes 40 Percent Tax Hike on Petrol to Cut Emissions, Petrol Usage Hits Record High Instead – Policy Gone Wrong?


At a time when petrol prices in Singapore crashed to its lowest in 6 years, the government implemented a petrol tax hike of up to 40 percent.

That was 2015, and the reason given by then-Finance Minister Tharman Shanmugaratnam was that the tax hike would encourage less car usage and reduce carbon emissions.

In 2017, Singapore consumed a record 6,453,600 barrels of petrol – so much for the effectiveness of that tax hike in meeting its publicly-stated purposes.

Singapore’s vehicle population has shrunk by 2 percent since 2013, and the hike in petrol use has been attributed to the rise in private-hire vehicle drivers – their numbers rose 400% to 55,000 in 2017.

Some, like Singaporean Peter Chua, have questioned if the government’s plan was really all about “collecting more money” and question whether the government is hiding the impact of policies gone awry.

Said Chua:

“In 2016, I wrote a letter to the media and it was published in Today. I asked if any studies were done to determine if the increased petrol tariffs has indeed reduced car usage. Government introduced a measure to curb car usage, surely you must be interested to know if it is working. No agency published a reply to my letter.

In 2017, I wrote to Tharman, Heng Swee Keat, Melvin Yong (The MP for my Constituency) and asked the same question. No one replied. Finally I wrote to the Ministry of Finance and they replied. I asked if any study was done to determine that the additional tariffs have indeed reduced car usage and also by 2017, oil prices have gone up and the 2nd reason used by Tharman is no longer valid.

MOF initially gave standard replies that they would monitor to make adjustment to policies accordingly. I pressed on and after many email exchanges, they finally told me that they think the tariffs have worked because the public transport usage has gone up by 2%! They ignored my question about oil price has gone up since 2015.

I replied and told them a 2% increase in public transport usage doesnt mean there is a reduction in car usage. It means that MOF has not done any study to determine if the additional tariffs have achieved its objectives. They are not interested if the objectives are met. They only want to collect more revenue and gave all kinds of excuses.”

Others, like Chua, have questioned the effectiveness of government tax hikes, and whether there was even a coordinated effort to achieve its goals of less car usage and reduced carbon emissions.”

This, in the light of the government’s Budget 2018 announcement that it will be levying a carbon tax on industries, and the Budget 2017 water price hike of up to 30 percent to encourage Singapore residents to “save water”.

With Singapore pegged as the world’s most expensive city to live in for the 5th consecutive year, residents are naturally concerned with rising costs due to taxes, and whether these costs are justified.



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