Budget 2021

Petrol duty hike intended to set price signals: Heng

Making drivers switch to electric vehicles immediately not the aim of the adjustment

The duty for 98-octane petrol was recently raised by 23 per cent, and that for 92-octane and 95-octane by 18 per cent, but almost all of the increase in duty collections this year is expected to be channelled back to petrol vehicle owners as offsets.
The duty for 98-octane petrol was recently raised by 23 per cent, and that for 92-octane and 95-octane by 18 per cent, but almost all of the increase in duty collections this year is expected to be channelled back to petrol vehicle owners as offsets.ST PHOTO: YEN MENG JIIN

The recent petrol duty hike is meant to set price signals and change behaviour rather than get drivers to switch to electric vehicles immediately, Deputy Prime Minister Heng Swee Keat said yesterday.

He was responding to MPs, including Dr Lim Wee Kiak (Sembawang GRC) and the Workers' Party's Mr Dennis Tan (Hougang), who asked why the duty was raised before the infrastructure for electric vehicles is fully ready.

"Just like how we have made deliberate decisions to protect our environment, we want people to make conscious choices about how to drive, how much to drive and whether to even drive at all," said Mr Heng, who was rounding up the debate on the Budget statement.

Electric vehicles are also not the only alternatives, he said. Hybrid vehicles are another option, and are already widely available today.

Public transport, too, is being kept affordable and accessible through rail and bus subsidies as well as investments in infrastructure, he added.

Mr Heng also stressed the need for Singapore to protect its environment, noting that climate change and environmental sustainability were not issues that had become priorities overnight.

They date back decades, and efforts to tackle the issues include improving sanitation systems and cleaning up the Singapore River in the 1960s to 1980s, and encouraging the adoption of cleaner vehicle alternatives as far back as 2001.

"Ultimately, protecting our environment must be our commitment to future generations of Singaporeans. This is just one of the many small but necessary steps in our whole-of-society, multi-generational efforts to preserve our clean living environment," said Mr Heng.

While the recent petrol duty hike will have a bigger impact on those who drive for work, such as taxi and private-hire car drivers, measures have been put in place to mitigate the impact, the Deputy Prime Minister said.

"I understand the pressure that you are facing, especially during this (Covid-19) situation," he said, addressing the concerns raised by MPs such as Ms Mariam Jaafar (Sembawang GRC) and Mr Darryl David (Ang Mo Kio GRC). "There will never be a good time to raise petrol duty."

To cushion the impact of the increase, which raised the duty for 98-octane petrol by 23 per cent and that for 92-octane and 95-octane petrol by 18 per cent, the Government expects to channel almost all of the increase in duty collections this year back to petrol vehicle owners as offsets, said Mr Heng, who is also Finance Minister.

Those who depend on driving for their livelihoods will also be receiving additional petrol duty rebates on top of the road tax rebates that were announced earlier, he said.

Taxi drivers will receive 15 per cent in road tax rebates in the form of rental reductions between the middle of next month and April. They, along with private-hire drivers, will also each receive $360 of additional petrol duty rebates between May and August, the Land Transport Authority announced earlier.

The taxi operators and GrabRentals have agreed to pass on the road tax rebates to their drivers, said Mr Heng.

Ride-hailing company Gojek will also introduce additional incentive rebates for its drivers from next month. Motorcycle owners will receive their additional petrol duty rebates from May.

At the same time, such broad-based rebates will not be able to cater to every unique circumstance, or reach those in more informal work arrangements, Mr Heng acknowledged.

"We are working with the labour movement to see how we can provide further help to self-employed delivery workers and limousine drivers," he said.

A version of this article appeared in the print edition of The Straits Times on February 27, 2021, with the headline 'Petrol duty hike intended to set price signals: Heng'. Subscribe