We refer to Mr David Goh Kia Ngan’s letter “Have separate COE categories for commercial vehicles” (12 Nov 2014).
Category (Cat) C has been created for commercial vehicle buyers so that they need not compete with other vehicle buyers when bidding for a Certificate of Entitlement (COE). Splitting Cat C would result in a much smaller quota available in each sub-category for each bidding exercise, and lead to greater volatility in prices.
To help businesses with the cost of vehicle ownership and usage, the Additional Registration Fee for commercial vehicles is set at only 5% of the vehicle’s Open Market Value (OMV), compared to an effective rate of more than 100% of OMV for cars. Commercial vehicle owners also enjoy lower effective road taxes and are exempt from diesel fuel taxes. Businesses can renew the COE of their vehicles every five years.
Following the enhancements made to the Early Turnover Scheme (ETS), at the current level of COE prices, owners of eligible vehicles enjoy an average discount of more than $20,000 on the COE for their replacement vehicles, as they can transfer the remaining COE period from the existing vehicle to the replacement vehicle and receive a bonus COE period proportional to the existing vehicle’s remaining lifespan.
The take-up for ETS has been increasing steadily since it was enhanced in March 2014, from about 20% of all commercial vehicle deregistrations to 70% in the last COE quota cycle. This means that most owners have been able to register new commercial vehicles without paying the full prevailing COE price.
We thank Mr Goh for the opportunity to clarify.
Helen Lim (Ms)
Director, Media Relations
Land Transport Authority