Budget roundtable

What's behind diesel tax increase?

Diesel-powered light passenger vehicles may not be appropriate for dense urban areas because of air pollution issues, says economist Walter Theseira.
Diesel-powered light passenger vehicles may not be appropriate for dense urban areas because of air pollution issues, says economist Walter Theseira.LIANHE ZAOBAO FILE PHOTO

The diesel tax increase from 10 cents per litre to 20 cents might be a way to correct an older policy on light passenger-use diesel vehicles that cause pollution in a dense city, said Singapore University of Social Sciences economist Walter Theseira at a roundtable last week to discuss the Budget statement.

"The only reason why we're going after diesel is it's been shown that diesel fuel usage has a lot of negative externalities, mostly because of the particulate matter, the nitrous oxide pollution," he said.

Some years ago, diesel was embraced and encouraged for passenger vehicles because it was seen as a good solution to carbon emissions, he added. "This move to increase diesel taxes is a way of trying to correct this policy issue that we and other governments made, perhaps (as) a mistake in the past."

While electric vehicles (EVs) might seem a better solution, there are no charging infrastructure standards yet that can support them for widespread passenger use, Professor Theseira noted.

"What we should do is start deploying EVs in controlled environments first for fleets where we can build the infrastructure and know that it'll be utilised," he said. For widespread passenger vehicle use, he suggested waiting for mass adoption in bigger markets where the charging infrastructure would be stable.

 
A version of this article appeared in the print edition of The Sunday Times on February 24, 2019, with the headline 'What's behind diesel tax increase?'. Print Edition | Subscribe