Transport Minister: We're open to charging more for car usage to increase vehicle population

SINGAPORE — The Government is open to reviewing the idea of a one-off increase in the total vehicle population spread over a few years, accompanied by higher usage-based charges to prevent congestion, said Transport Minister Chee Hong Tat.

"This includes location- and time-based charges like our current ERP system, as well as the possibility of having distance-based charging in future, which some commentators have suggested," Chee told Parliament on March 5.

But the trade-offs are not straightforward and need to be studied carefully before a decision is made, he added.

Chee was responding to Saktiandi Supaat (Bishan-Toa Payoh GRC) on whether Singapore would introduce distance-based charging, which would allow the country to increase its vehicle population while still keeping to the vision of going "car-lite".

The current Electronic Road Pricing (ERP) system charges a fee when a vehicle passes fixed gantries.

Singapore is rolling out its next-generation ERP system, which is satellite-based and can charge motorists based on distance travelled.

The Land Transport Authority, which started installing new on-board units for ERP 2.0 on vehicles in November 2023, has said it has no immediate plans to introduce distance-based charging.

The idea of usage-based charging is not new, Chee said during the debate on his ministry's budget.

He cited how the Economic Review Committee in 2002 recommended a gradual lowering of car ownership taxes along with an increase in certificate of entitlement (COE) supply, and striking a better balance between ownership charges and usage charges.

Vehicle ownership taxes were reduced during the 2000s after the ERP system was rolled out in 1998, he said. In 2002 and 2003, the Government released an additional 5,000 Open category COEs, on top of the allowable vehicle population growth rate.

Chee said it is not feasible to rely only on usage-based charges to prevent traffic congestion, as "these would have to be set at very high rates, which might not be acceptable to many car owners".

Other ownership controls and measures such as parking charges have to be employed along with usage-based charges to "achieve a more balanced and sustainable outcome for all stakeholders, while ensuring smooth traffic on our roads", he added.

Singapore has maintained a zero vehicle population growth rate since February 2018, which is fixed until Jan 31, 2025. There is an exception for commercial vehicles, which can increase at a rate of 0.25 per cent annually.

Vehicle population is controlled through the supply of COEs. To achieve zero population growth, a COE becomes available for tender when a vehicle is deregistered.

A tight supply of COEs in 2022 and 2023 led to soaring COE premiums.

Panellists at a roundtable discussion organised by The Straits Times in November 2023 called for a revamp of the COE system, with more emphasis on controlling the usage of vehicles on the road instead of simply capping their numbers.

Calling usage-based charging a fair approach in principle, Chee said there is a need to study the impact on those who drive longer distances — such as taxi, private-hire car and delivery drivers — as they will likely have to pay more under such a system.

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This article was first published in The Straits Times. Permission required for reproduction.