Budget 2022: Vehicle tax, COE revenue set to rise 15% to $6.46 billion

Vehicle tax revenue is expected to rise by 5.9 per cent to $2.53 billion. ST PHOTO: CHONG JUN LIANG

SINGAPORE - Revenue from motor vehicle taxes and certificates of entitlement (COE) is expected to rise by 15.2 per cent to $6.46 billion this year (2022).

Motor vehicle taxes are expected to rise by 5.9 per cent to $2.53 billion, likely on the back of bigger and more luxurious cars being sold. This is because almost all Open COEs are used to register such cars.

While the vast majority of cars here have long been small, mass-market models, the big-car population has been closing the gap in recent decades and last year, it exceeded that of smaller cars for the first time.

Land Transport Authority figures show that there were 323,174 cars above 1,600cc or 130bhp as at the end of 2021 compared with 321,500 cars below 1,600cc and 130bhp. This trend is likely to prevail.

Rising COE premiums - they are around double what they were last year - indicate that revenue is set to reach $3.93 billion, or 22 per cent up, from the revised 2021 figure.

COE for cars up to 1,600cc last closed at $60,761, while the premium for bigger cars ended at $86,102. The Open COE, which is almost exclusively for bigger cars, ended at $87,000.

Demand for bigger cars (and consequently big-car COEs) is also driven by a growing segment of wealthy buyers. Last year, these buyers pushed super-luxury car sales up by almost 40 per cent.

As a result, COE and vehicle taxes - excluding GST and excise duty - will contribute $6.46 billion to make up 7.9 per cent of the Government's total operating revenue this year, versus $5.61 billion or 7 per cent last year.

Correction note: An earlier version of this article said motor vehicle taxes are expected to rise by 5.5 per cent. MOF has clarified that it should be 5.9 per cent.

Read next - Budget 2022 highlights: GST hike, higher income tax for top earners and CDC vouchers for all

Remote video URL

Join ST's WhatsApp Channel and get the latest news and must-reads.