COE, vehicle tax revenue shrinks for FY2019

Revenue from Certificates Of Entitlement (COE) and vehicle registration taxes for the financial year ending 31 March 2020 will shrink by $1.1 billion to among their lowest levels in recent years.

According to the Budget statement, Singapore's operating revenue for the year has been revised 0.2% lower, to $74.7 billion. The decrease was partly because of lower-than-expected collections from motor vehicle taxes and vehicle quota premiums.

Motor vehicle tax collections are estimated to be $2.5 billion - $0.6 billion or 20.5% lower than the budgeted estimate. This was because of fewer-than-projected registrations, which dragged down Additional Registration Fee collection, the main car tax.

On top of that, more cars qualified for tax breaks under the Vehicular Emissions Scheme (VES), which metes out rebates and surcharges based on a car's emission levels.

Revenue from COE was estimated at $2.9 billion - $0.5 billion or 15.1% lower than the budgeted estimate. This was mainly because of a smaller-than-projected COE quota.

COE supply has been shrinking because of the cyclical nature of the quota system, as well as more motorists deciding to hold on to their cars beyond 10 years.

In comparison, the actual FY2018 revenue from COEs was $3.62 billion, while revenue from vehicle taxes was $2.62 billion.

Looking ahead, COE collection for FY2020 is projected to shrink further to $2.64 billion, while revenue from vehicle taxes is expected to fall to $2.27 billion. Expenditure for transport for FY2020 is expected to increase by $0.7 billion or 7.1%, fuelled by MRT projects.