Forum: Does five-year COE renewal count towards overall quota?

Vehicles on the Ayer Raja Expressway, on Oct 29, 2019.
Vehicles on the Ayer Raja Expressway, on Oct 29, 2019.ST PHOTO: KUA CHEE SIONG

I read about Mr Koh Lin Yee, who is seeking a court order that will allow him to keep his car after his one-off five-year certificate of entitlement (COE) renewal expired (Motorist sues LTA over COE renewal, Jan 4).

A question that cropped up in my mind is whether a five-year COE renewal, which costs half that of a 10-year one, reduces the quota available for new cars that will each incur the cost of a 10-year COE. I hope the Land Transport Authority can shed light on this.

If a five-year COE counts towards the COE quota, this raises the question of why a half-price five-year COE is allowed to deprive a full-price 10-year COE for a new car of its existence.

Aside from the fact that there could be a form of "revenue leakage" of half of a 10-year COE each time a car's COE is renewed for only five years, another concern is whether a system in which both five-year and 10-year COEs count towards the same quota favours the incumbent car owner unfairly over a buyer of a new car, since the incumbent car owner needs only half the amount a new car buyer needs to secure a COE.

A five-year COE that counts towards the quota would defeat the purpose of a COE as an additional tax on car ownership, when that additional tax is only half the amount of the 10-year COE for a new car.

While the unused portion of a COE is refundable, which means that the ultimate cost of a COE could be less if the COE is cancelled sooner (which could happen if the car is scrapped or exported), the upfront cost of a COE is a deterrent, and halving the amount of a COE by allowing for five-year COEs is as good as halving the deterrent effect of the 10-year COE.

Janet Tan

A version of this article appeared in the print edition of The Straits Times on January 07, 2020, with the headline 'Does five-year COE renewal count towards overall quota?'. Subscribe