Lowering fuel taxes counterproductive, will amount to subsidizing private transport: Lawrence Wong

SINGAPORE – Reducing or suspending taxes on petrol and diesel to cushion the impact of rising fuel prices on motorists and transport operators here will have counterproductive effects, the finance minister says Lawrence Wong Monday, April 4.

Such a move effectively amounts to a subsidy to private transportation, Wong said.

Fewer than four in 10 households in Singapore own a car, he noted. Among the lowest quintile, only about one in 10 households do so.

Reducing fuel taxes or providing rebates on road taxes would therefore benefit this “relatively small but generally better-off group”, Mr Wong told parliament.

In the event of a fuel duty reduction, part of the subsidies will also accrue to fuel producers and suppliers instead of just consumers, as prices at the pump could fall by a margin less than the duty reduction.

More importantly, such a move will also reduce the incentive to switch to more energy-efficient modes of transport, a key part of Singapore’s plans for a sustainable lifestyle, Wong added.

The minister was responding to calls from seven backbenchers – Mr. Murali Pillai (Bukit Batok), Mr. Edward Chia (Holland-Bukit Timah GRC), Mr. Xie Yao Quan (Jurong GRC), Ms. Mariam Jaafar, Dr. Lim Wee Kiak (both Sembawang GRC), Mr. Saktiandi Supaat (Bishan-Toa Payoh GRC) and Workers’ Party MP Louis Chua (Sengkang GRC) – to temporarily reduce fuel excise duties, grant discounts on road taxes or to provide other forms of support in the face of soaring fuel prices.

Fueled by the war in Ukraine and subsequent sanctions against Russia, prices at the gas pump soared to $3 a liter or more in early March. Prices at the pump have fallen since then due to lower oil prices, with all brands of 92 octane fuel and a 95 octane dip below $3 on Monday April 4.

Mr Wong said on Monday he understood why MPs had asked the government to reduce or suspend fuel taxes in the face of rising prices at the pump.

But he said the best way to help Singaporeans cope with rising fuel costs and inflation in general is to provide support through measures that have been considered in the framework. of this year’s budget. These include reimbursements for service and conservation fees and utility bills, as well as increased help for low-income people.

The $100 CDC vouchers for each Singaporean household announced in the budget will also be disbursed earlier, by mid-May, he added.

“Through these measures, we are providing practical help directly to Singaporeans to meet their various needs, including their utility bills, children’s education and basic necessities, and we are providing more targeted assistance to low-income groups,” he said. mentioned.

Mr Wong said he recognized that certain groups, such as taxi drivers, private hire car drivers and delivery people, had been hit by increases in petrol and diesel prices.

He noted that taxi and private hire car operators have implemented temporary fare increases to cushion the blow of rising prices at the pump and that consumers are sharing this burden.

He also noted that these operators have ties with oil companies to offer fuel at discounted prices.

He urged those in need of financial assistance to approach social service offices, community centers or self-help groups.

Melvin Z. Madore