Cost of Green Car Scheme

Media Replies 21 Aug 2014

THE article (“Green cars cost $155m in tax breaks”; Aug 6) omitted several key facts.

It stated that the Carbon Emissions-based Vehicle Scheme (CEVS) rebates translated to more than $155 million in taxes forgone, and incorrectly concluded that this was three times more than what was envisaged.

First, CEVS rebates granted are used to offset the Additional Registration Fee payable. Hence, when the car is eventually deregistered, the Preferential Additional Registration Fee (Parf) rebate is also reduced accordingly.

The cost estimate of $34 million announced in March 2012 takes this into account, and is the cost for both cars and taxis. The $155 million, however, refers to the total rebates given only to cars, before Parf is taken into account.

Second, the CEVS not only gives rebates but also imposes surcharges. In the 12 months since the surcharge was implemented on July 1 last year, surcharges totalling $13 million were collected.

Third, $155 million is the total rebate for cars only over the 18 months since the scheme started, whereas $34 million was the total net rebate for cars and taxis expected over 12 months. If we compare like-for-like, the average annual cost of the CEVS is about $62 million to date, compared with the previously expected $34 million.

The article also stated that nearly 60 per cent of new cars sold since the start of the scheme qualified for the rebates, whereas the Government had expected only 20 per cent to qualify. The 20 per cent figure mentioned by the Ministry of Transport refers to the proportion of vehicles registered in 2011 that would have benefited from the rebates, had the scheme been in place then.

The ministry had then also estimated that about 30 per cent to 40 per cent of all new cars would receive rebates, and cautioned it would be difficult to forecast the take-up accurately due to changes in consumer behaviour.

Helen Lim (Ms)
Director, Media Relations
Land Transport Authority

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