Forum: Consequences of having sky-high COE prices

Surely, the Government must be watching with concern the

sharp rise in certificate of entitlement (COE) premiums

in the past few months.

No doubt it is the Government’s policy to limit the number of COEs to control the vehicle population. The high COE premiums are unavoidable due to the limited number of COEs available for bidding each month.

The consequences of higher COE premiums are:

- The cost of living will rise, causing a ripple effect on the economy and affecting everyone;

- Push factors are created for those in the middle-income groups to leave Singapore for good. This will cause a brain drain in our workforce at the professional, managerial, executive and technical (PMET) levels.

Some Singaporeans will want the Government to have a new COE category for 3,000cc cars for the rich to compete among themselves and not for them to compete against the middle-income groups in the 2,000cc COE category.

Others may argue that higher COE premiums could serve a common social good when the Government is seen to give higher public transport rebates to the lower-income groups.

The hidden trade-offs cannot be ascertained or determined easily in a dynamic economy with no capital gains tax or estate duty tax for the distribution of wealth, as it could cause the income gap between the rich and the poor to widen further.


Tan Kok Tim