Measures will more than offset diesel duty incurred in the first year for large majority of vehicles

As announced by Minister for Finance Heng Swee Keat in the Budget Statement 2017, a volume-based duty on automotive diesel, industrial diesel and the diesel component of biodiesel will be introduced starting 20 February 2017 to encourage users to reduce diesel consumption.

2 To mitigate the impact of the diesel duty, the annual Special Tax levied on diesel cars and taxis will be reduced permanently. Road tax rebates will be provided over the next three years for diesel buses and goods vehicles, with additional cash rebates for owners of diesel school buses and eligible private hire or excursion buses used to ferry school children. For the large majority of vehicles, these measures will more than offset the diesel duty incurred in the first year of the duty.

Reduction of Special Tax for Diesel Cars and Taxis

3 Currently, an annual Special Tax is levied on diesel cars and taxis. With the introduction of the volumetric diesel duty, the annual Special Tax for diesel cars and taxis will be permanently reduced by $100 and $850 respectively with effect from 20 February 2017. Taxi companies are strongly encouraged to pass on fully the cost savings from the Special Tax reduction to their taxi drivers.

4 As time is needed to effect the necessary system changes to implement the Special Tax reduction, vehicle owners will continue to receive their road tax payment notice (including the Special Tax payable) based on the existing rates until end-June 2017.

5 For owners paying the Special Tax based on the existing rates until end-June 2017, as well as those who have already paid the Special Tax for the period beyond 20 February 2017, the excess Special Tax paid will be used to automatically offset the amount payable at the next road tax renewal. If the vehicle is transferred to another owner before its next road tax renewal, any excess Special Tax paid will be offset against the transfer fee payable, and any remaining excess Special Tax paid will accrue to the new registered owner.

Road Tax Rebates for Diesel Buses and Goods Vehicles

6 Owners of diesel buses and goods vehicles (except omni-buses under LTA’s contracts for public bus services) will be granted road tax rebates for a three-year period from 1 August 2017 to 31 July 2020. A 100 per cent road tax rebate will be granted in the first year, followed by 75 per cent in the second year and 25 per cent in the third year. The revised tax rates are shown at Annex A.

7 These road tax rebates will not apply to public bus services operating under LTA’s contracts. Separate arrangements will be made with these bus operators under the provisions of the contracts.

8 Diesel buses and goods vehicles will need to meet all the existing requirements for road tax renewal in order to receive the road tax rebates. These include having valid motor insurance and passing vehicle inspections, where applicable.

9 For diesel bus and goods vehicle owners who have paid the road tax for the period beyond 1 August 2017, the excess road tax paid will be used to automatically offset against the amount payable at the next renewal. If the vehicle is transferred before its next road tax renewal, the excess road tax paid will be offset against the transfer fee payable, and any remaining excess road tax paid will accrue to the new registered owner.

Additional Cash Rebates for Diesel Buses Ferrying School Children

10 Diesel school buses, and eligible diesel private hire or excursion buses used to ferry school children will receive the additional cash rebates shown at Annex B during the qualifying period from 1 August 2017 to 31 July 2020.

11 Diesel school buses which are registered with LTA will automatically receive the additional cash rebates on 1 August and 1 February during the qualifying period from 1 August 2017 to 31 July 2020.

12 Eligible diesel private hire or excursion buses can continue to apply to LTA to enjoy a further 50 per cent rebate off the new road tax rates shown at Annex A^[1]. They are not required to apply separately for the additional cash rebates, as these will be processed automatically with their application to LTA for the 50 per cent rebate, and will be pro-rated based on the total number of eligible months.