Reducing fuel duties across the board ‘too blunt an approach’, could be regressive: Jeffrey Siow
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Petrol and diesel prices have been steadily climbing since the start of the Iran war, with diesel prices between $4.42 and $4.68 per litre as at April 6.
PHOTO: ST FILE
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- Singapore will not cut fuel duties broadly due to it being "too blunt" and wanting to preserve energy efficiency incentives, according to Jeffrey Siow.
- Targeted support, like the $200 cash disbursement for platform workers, is preferred for those directly impacted by rising fuel prices.
- The government believes the petrol market is competitive and will monitor for anti-competitive behaviour, said Gan Siow Huang.
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SINGAPORE – Even as the Government works towards cushioning Singaporeans from the impact of war in the Middle East, it will not reduce fuel or diesel duties across the board.
Doing so, said Acting Minister for Transport Jeffrey Siow, “is too blunt an approach, and it could also be regressive”.
Speaking in Parliament on April 7, Mr Siow, who is also Senior Minister of State for Finance, added: “At the same time, we want to preserve the price signals for consumers to use energy more efficiently.”
He said that as an open economy, Singapore must allow fuel prices to reflect market realities. “If prices are artificially suppressed, importers may choose to divert fuel to where prices are higher, and over time, this can tighten supply and leave us worse off.”
He said the Government’s “targeted approach” provides support for those who are directly impacted, and this allows help to be channelled to those who need it most.
Mr Siow had earlier announced a one-off $200 cash disbursement to active platform workers, private-hire car drivers and taxi drivers from the end of April, as well as temporary government assistance to co-fund cost increases for some essential bus services.
Several MPs had filed questions on fuel prices, including Mr Louis Chua (Sengkang GRC), who asked if the Government is considering temporary or permanent diesel and petrol pump price adjustment mechanisms to mitigate the impact of pump prices on consumers and businesses.
Mr Fadli Fawzi (Aljunied GRC) had asked whether the Government would further regulate petrol station operators to ensure that changes in petrol prices are linked to actual market conditions.
And Ms Diana Pang (Marine Parade-Braddell Heights GRC) and Mr Foo Cexiang (Tanjong Pagar GRC) had asked about measures to reduce anti-competitive behaviour among petrol companies.
Petrol and diesel prices have been steadily climbing since the start of the Iran war, with diesel prices between $4.42 and $4.68 per litre as at April 6, which is more than the $4.10 to $4.20 per litre for premium petrol.
According to motoring website Motorist.sg, diesel prices had mostly remained at around $2.50 to $2.60 per litre in the past 24 months, before hitting $2.70 per litre on March 4, just after the war began, and increasing thereafter.
The posted price of 95-octane petrol, meanwhile, is between $3.46 and $3.47 per litre, which surpasses the previous record $3.42 per litre set during the Ukraine crisis in 2022.
Responding to Mr Fadli’s question on regulating petrol station operators, Minister of State for Trade and Industry Gan Siow Huang said Singapore’s competitive and open economy means that prices would naturally fluctuate in response to various factors, including changes in global supply and demand.
“The Government does not dictate the prices or price changes of businesses, so long as the prices are set independently,” she said, adding that the approach is to ensure the market remains competitive.
Ms Gan said there is no evidence to suggest that the market for petrol station operators is not competitive.
She added that the Competition and Consumer Commission of Singapore will keep watching pump prices to make sure there is no anti-competitive behaviour.
Citing measures such as road tax and petrol duty rebates that were part of Budget 2021, Mr Pritam Singh (Aljunied GRC) asked what thresholds would have to be met for similar measures to be rolled out to assist Singaporeans who rely on vehicles for their livelihoods.
Mr Siow said that besides being a revenue measure, road tax works with other policies to achieve other longer-term outcomes. These include pricing in externalities related to public health and pollution, and influencing buyers to choose more fuel-efficient vehicles.
Pressed further by WP’s Mr Chua on whether measures can be extended specifically to businesses with diesel vehicles, Mr Siow said that even if diesel tax duties are cut, the savings “may not necessarily pass through fully to the end consumer”.
Mr Siow reiterated that the Government does not want to blunt price signals and reduce the incentive for businesses to switch to more energy-efficient modes of transport.
