Multiple-car owners may face surcharge, COE system to be refined

To spread car ownership more evenly, the government is considering levying a surcharge on individuals who wish to own more than one car.

Engine power could also be factored into the categorisation of cars under the Certificate of Entitlement (COE) system.

Transport Minister Lui Tuck Yew spoke about these suggestions when he visited the site of the upcoming Marina Coastal Expressway on Thursday.

The current COE categories are based on engine capacity.

Traditionally, mass-market cars (small cars of 1,600cc and below) are in Category A.

But the car industry has evolved, and now higher end options are also in that category.

Such luxury cars took up about a third of Category A registrations last year, compared to just 7 percent in 2010.

Mr Lui said: "Models such as Mercedes C180 Kompressor and Audi A1 have an open market value and engine power that is significantly higher than those of more mass-market models such as Toyota Corolla Altis and Honda City.

"While this is a reflection of increasing affluence and consumer preferences, we also want to make sure that Category A, which is intended for buyers of smaller budget cars, retains its original purpose."

Hence, to better delineate Category A, engine power - which determines the performance of the car - could be used as an additional criterion.

Honorary Secretary of the Singapore Vehicle Traders Association Raymond Tang said that categorising COE on engine power alone will be fairer to buyers from the middle income groups.

He said: "Cars, for instance MPVs, Honda Stream, Toyota Wish, they are in Category B because of their cc (cubic centimetres).

"But in terms of their horse power and in terms of (buyers), it should be for those lower and middle income people. So if they are in Category B, it causes a stress to them, because they are challenging those 'big boys'."

Another option is to have an individual who wants to own a second car or more, fork out more cash upfront on top of COE.

Mr Lui said: "I am open to considering sensible options that could possibly take the form of, for example, levying a surcharge for the second, third or more cars owned by the same individual.

"The rationale would be that in exchange for the privilege of owning several cars, these owners should pay proportionately more by way of levies."

Mr Lui acknowledged that there are downsides to such a policy.

For example, some owners could circumvent the rule by registering the car in the name of a relative or family member.

If implemented, the surcharge will not apply to existing multiple-car owners. Commercial vehicles and motorcycles will also not be affected.

The public and industry players will be consulted on the proposed changes, before a decision is made later this year.

SOURCE

Changes to the COE system has been long overdue, especially now that the luxurious brands are spreading its range of cars into the Cat A sector. With less than 10% in 2010, luxurious brands now cover close to half of Cat A bidders. That is a big cause for concern as Cat A is supposedly catered for less budget car buyers.

Another change is charging extra for individuals owning more than one vehicle. Well, if he/she is rich enough to own more than one car, what is this extra cost to him?