askST: Is ERP 2.0 a revenue generator?

The second-generation Electronic Road Pricing, which uses satellite technology instead of gantries, will go live in 2020. The $556 million system has islandwide coverage and the ability to charge according to distance travelled as well. Several readers have written in, asking if a simpler solution to crimping car usage would be to raise fuel duty exponentially. Others asked if the whole purpose is to generate revenue.

Senior Transport Correspondent Christopher Tan addresses these questions.

If the Government relies solely on high fuel duty to manage car usage, every motorist will incur higher expenses - including those who drive their vehicles on relatively empty roads during off-peak hours.

ERP 2.0 is a finely calibrated congestion charging system. Like the current ERP system, its purpose is to manage demand for space on congestion-prone roads and during peak periods. Roads are priced in such a way that capacity utilisation is optimal (too high a price will lead to empty roads, which means an underutilisation of infrastructure).

Indeed, if the Government's objective is to raise revenue, it could simply raise petrol duty, or car taxes, or issue more certificates of entitlement.

Instead, it is investing $556 million on an equitable system that hinges on the user-pays principle.

The system has other uses, such as allowing coupon-less curb-side parking, and automatic charging for offpeak car usage.