In Parliament on Monday (Apr 4), Finance Minister Lawrence Wong said that despite the sharp price increases in petrol prices, it would be counter-productive to reduce or suspend fuel duties or to provide road tax rebates.
He reasoned that such subsidies on private transport would only benefit a relatively small and generally better-off group, as fewer than four in 10 households own cars. Furthermore, among households who earn the lowest 20 per cent of household incomes, only about one in 10 do.
Over the last five years, fuel duties collected averaged S$920 million a year, he said.
Mr Wong said the Government should “think carefully” before giving up such sources of revenue, particularly when Singapore is facing “considerable revenue changes already”.
Responding to his announcement online, many netizens voiced their unhappiness and dissatisfaction, especially because they felt that many also drove vehicles for commercial or business purposes and these were the ones who needed the subsidies.
Others also asked why a wealth tax was not implemented instead, as that would directly reduce the income gap.
Here’s what they said:
“Cutting fuel duties also means that some of the subsidies will flow back in part to producers and suppliers themselves, not just to consumers, as the pump price may not fall as much as the reduction in duty”, said Mr Wong
“More importantly, such subsidies will reduce the incentive to switch to more energy-efficient modes of transport, which is a critical element in our plans for sustainable living.”
On the last point, Mr Wong likened fuel duties to a “carbon tax”, pointing out that Singapore does not impose such a tax on fuel.
“We are already moving in the right direction on carbon tax, to raise carbon tax, to accelerate our green transition and to achieve our net zero target. So, it will not be consistent as we move on that front to, on the other hand, reduce fuel duties,” he said. /TISG