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New diesel tax explained Singapore Budget 2017

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In the Singapore Budget 2017, the government announced immediate measures aimed at cutting diesel consumption.

One Sentence Summary

With immediate effect, the current annual lump sum Special Tax levied on diesel vehicles will be replaced with a volume-based duty.

What does this mean for drivers of diesel cars?

  1. Diesel car owners will now pay S$0.10 per litre of car diesel used. So rather than paying a regular lump sum annual fee, drivers will be taxed on how much diesel they use.
  2. The Special Tax that car owners currently pay will be reduced by $100. This will take time to implement and the reduction will begin in June 2017.
  3. For owners paying the Special Tax from February 20th to end of June 2017:

    The excess amount you pay will be offset against the amount you pay at your next road tax renewal. This means that drivers who are still paying at the existing rate will not lose out on the new reduced tax rate. 

  4. If your car is transferred to another owner before its next road tax renewal:

    Any excess Special Tax paid will be offset against the transfer fee. And any remaining excess Special Tax paid will go to the new registered owner.

  5. The government says the reduction of the lump sum Special Tax will more than offset the new diesel tax incurred in the first year of its introduction.

Why has the government introduced the new usage based diesel tax?

Taxing diesel according to usage helps to incentivize users to reduce diesel consumption and reduce air pollution.

Facts about air pollution from diesel cars

  1. Apart from carbon emissions, diesel emits highly pollutive particles and nitrogen oxides. These chemicals are associated with an increased risk of lung cancer and respiratory infections.
  2. Modern diesel cars produce 10 times more toxic air pollution than heavy trucks and buses.
  3. Emissions of nitrogen oxides (NOx) are known to be responsible for tens of thousands of deaths across Europe alone. The figures for Asia are thought to be much higher.

For general analysis of the good, the bad and the ugly from Singapore Budget 2017, check out our 2 minute guide on the blog. As always, we are looking for ways to help you make the most of your money.

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