Update On Effectiveness Of Additional Levy On Cars Sold Between Fourth And Sixth Month Of Ownership

Assoc Prof Jamus Jerome Lim asked the Minister for Transport whether the Ministry has assessed the effectiveness of the imposition of an additional levy on cars sold between the fourth and sixth month of ownership in discouraging COE speculation.

Cars registered under Categories A and B of the Certificate of Entitlement (COE) are only allowed to apply for a transfer of vehicle ownership three months after the date of registration. If cars are transferred between four and six months from the date of registration, an Additional Levy (AL) would be payable if the Quota Premium (QP) of the corresponding COE category at the point of transfer is higher than the original QP paid upon successful bidding for the COE.

The AL is part of a suite of measures to discourage COE speculation, which also includes requiring a bid deposit and disallowing the transfer of Temporary COEs for Categories A and B vehicles. Over the last five years, the Land Transport Authority (LTA) received, on average, three requests annually to waive the AL payable by the vehicles' owners. Over the same period, only one request to transfer car ownership from a deceased person to the executor of the deceased estate was acceded to.

Thank you, Mr Speaker. Just to follow up quickly on the original question in the Parliamentary Question. I am wondering if Senior Minister of State Amy Khor would elaborate on whether the efforts at discouraging speculation along the lines of banning transfers between four and six months have been relatively more effective than other kinds of measures. For instance, right now, my understanding is that lots of COEs are being speculated on indirectly by those that are purchased during a high supply year and then subsequently resold it in a low supply year.

First, let me clarify that for vehicle transfers within four to six months of registration is not a ban on transfer. You just need to pay the AL. With regard to the question about whether this is an effective policy tool, I have said in my reply earlier that it is part of a suite of measures to discourage COE speculation.

By way of explanation, let me also say that this policy to discourage double transfers was first implemented in 1995. That is really to discourage double transfers whereby you may bypass, to this means, the non-transfer TCOE policy of Cat A and Cat B vehicles. And there were public sentiments that double transfers would have resulted in higher COE prices. So, there were measures put in. For the first three months, you are not allowed to transfer for Cat A and Cat B vehicles and then, subsequently, in the next three months, you can transfer, but you will need to pay an AL only if what you paid is actually lower than the QP at the point of transfer, otherwise, there would not be any AL.

If you look at the numbers, I have said that, over the last five years, we received, on average, about three appeals for a waiver of AL. So, it is a handful of appeals. Over the same period, the proportion of Cat A and Cat B vehicles that are transferred within four to six months, as a proportion of the total Cat A and Cat B vehicles registered, is also very low, at about 0.3%.

So, I think these numbers do suggest that this policy tool remains relevant and useful as part of this suite of measures to counter CEO speculation.

Mr Speaker, I thank the Senior Minister of State for the reply and for sharing some of the reasons as well why one of the approvals for waiver was given because of a deceased person. I am just also wondering whether it is possible that LTA would consider cases where there is a very sudden, unexpected and catastrophic event, something like a permanent disability to the car owner or within the family, whether or not that would also qualify for waiver of the AL, because, sometimes, we do not plan it, especially when we are in a kind of like relatively young age. But, of course, the additional waiver can be quite a significant burden on this household which is already struggling and having to deal with this permanent disability or long-term illness.

I thank the Member for her questions. Let me say that I do sympathise with such families. As I have said, this is part of a suite of policy tools to discourage double-transfer COE speculation. So, for this to remain useful and relevant, the conditions or circumstances under which waiver of AL can be given would necessarily need to be stringent and limited in terms of circumstances. But having said that, as I have earlier clarified, the AL policy just means that if you want to transfer within four to six months, you have to pay an AL. It is not that you cannot transfer.

And for vehicle owners who wish to transfer within the four to six months and not wait thereafter because of various circumstances, they can actually sell it to motorcar dealers registered with LTA – what we called the electronic service agents – whereby they will not need to bear the AL. So, these registered dealers can take temporary ownership without incurring an actual transfer count and they have 12 months to sell the vehicle. And if they actually sell it after six months of vehicle registration, they also do not need to pay AL.

So, there is a way out, an option, for the appellant. But having said that, we hear the Member's views. And let me say that we will continue to look at appeals and review the circumstances under which waivers can be granted where the conditions warrant such a waiver.

Thank you, Mr Speaker. I just want to ask one last clarification from the Senior Minister of State. I thank the Senior Minister of State for sharing with us this kind of way out, that is, this option that is available to these families who find themselves in very trying circumstances, obviously with zero intention of speculating on COE for any financial gain. I am just wondering whether in terms of awareness of this scheme, this is something that LTA actually tells people who ask for this, because I just do not think that many people out there are aware that this is possible.

I am also aware that the Member has an appeal case on this. Indeed, we have told the appellant that there is this route that she could take, by transferring it to the registered motorcar dealer. We do have some 2,000 of these registered motorcar dealers. And our advice usually would be that they should approach CaseTrustSVTA-accredited dealers for such an option. Most of them would be registered.

Thank you, Mr Speaker. Just a quick clarification. I am wondering if the Senior Minister of State will clarify that, indeed, the Ministry's assessment of the efficacy of this particular Additional Levy scheme in discouraging speculation is based on the low number of transfers that are being transacted as a result of this scheme.

Let me say that it is part of a suite of measures. So, basically, you cannot strip one out from the other. But having said that, the low number is an indication, a suggestion, that it remains useful and relevant. But we continue to monitor the various policies we have to counter COE speculation.