Higher diesel car excise duties
During the 2019 budget speech on 18 Feb 2019, Finance Minister Heng Sweet Keat announced excise duty on diesel fuel will be doubled from $0.10 to $0.20, effective immediately.
Annual Special Tax reduced
To defray the higher taxes, the annual Special Tax for diesel cars and taxis will be reduced by $100 and $850 respectively.
In 2017, the annual Special Tax was similarly increased to defray the introduction of excise duty on diesel fuel.
Bad for taxi drivers
Despite reduced annual Special Tax for diesel cars and taxis, drivers will still be paying more in aggregate.
This is in line with intention of the government to encourage more environmentally friendly vehicles.
Mr Heng urged taxi companies to pass through the $850 cost savings from the rebate to taxi drivers which should defray three quarters of the higher cost.
Approximately 73% of taxis run on diesel, according to data from LTA.
This translates to taxi drivers footing up to $283 more taxes per year. Assuming a $3,000 monthly income, this equates to 0.8% lower income for taxi drivers.
Bad for diesel car owners / private hire car drivers
Meanwhile, Mr Heng expects the $100 cost savings from the rebate to diesel car owners to reduce the impact from higher excise duties by more than half.
This will result in diesel car owners paying up to $100 more taxes per year on average. Unlike taxis, diesel cars make up just 3% of the passenger car population.
A small group of drivers – private hire car drivers who drive diesel cars – will be impacted the most.
Private hire cars are considered passenger cars and owners will only have their annual special tax reduced by $100, despite driving a similar mileage to normal taxis.
This translates into an impact of up to $1,083 more taxes per year. Assuming a $3,000 monthly income, this equates to 3.0% lower income for private hire car drivers.
Save money on car servicing instead
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