Drawbacks of giving CEVS rebate in cash

Media Replies 08 Aug 2014

We thank Mr Tay Kim Pin for his feedback in the letter “Do consumers benefit from 'green' car rebate?” (The Straits Times, 22 July 2014).

Under the Carbon Emissions-based Vehicle Scheme (CEVS), cars with low carbon emissions qualify for rebates ranging from $5,000 to $20,000. Since LTA introduced the CEVS in January 2013, more than 19,000 car owners have received CEVS rebates. 

Currently, the rebates are offset against the Additional Registration Fee (ARF).  In a competitive market, this should lead to lower car prices and thus, savings for the buyers.  Giving the rebate in cash after registration as Mr Tay suggested will better ensure that the benefit flows completely to the buyer, if dealers do not raise car prices.  However, there are two disadvantages.  First, the buyer would need to pay a higher upfront cost for the car.  This may result in a higher loan taken and interest paid. Second, the rebate will only benefit the first buyer of the car.  When the car is on-sold, the subsequent buyer will not benefit.

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


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