Motorcycles will be subject to progressive taxes, just like cars.
It was also announced on Monday that these two-wheelers no longer have to give up some of their COEs (certificates of entitlement) for the open category COE quota.
Finance Minister Heng Swee Keat's Budget speech, which unveiled incentive schemes to encourage the use of cleaner vehicles, was a welcome anti-climax to the car industry's weekend of anxious speculation.
Motorcycles now incur a flat Additional Registration Fee (ARF) of 15 per cent of their open market value (OMV), but Mr Heng noted that a small but rising number of people are buying expensive motorcycles, which have OMVs similar to those of small cars.
"Just as we introduced tiers to the ARF for cars in 2013 to improve progressivity, I will introduce two more tiers for the more expensive motorcycles," he said.
For motorcycles with an OMV up to S$5,000, the ARF remains at the current 15 per cent.
But from the second COE bidding exercise in February, the next S$5,000 of motorcycle OMV will be subject to an ARF rate of 50 per cent; the remaining OMV beyond S$10,000 will be slapped with 100 per cent ARF.
Based on today's registration trends, Mr Heng said, more than half of new motorcycle buyers will continue to pay the current ARF rate of 15 per cent.
He added: "As a complementary measure, the Ministry of Transport will cease the contribution of motorcycle COE quota to the Open category COE quota. This will help address the gradual decline in motorcycle population, as very few Open category COEs have been used to register motorcycles."
When vehicles in the four vehicle categories - A to D - are deregistered, a percentage is taken from each of these four pools to form the COE quota for the open category, E.
Turning to the current Carbon Emissions-based Vehicle Scheme (CEVS), Mr Heng said it will be replaced with a new Vehicular Emissions Scheme, which will consider four other pollutants on top of carbon dioxide, "so as to account more holistically for the health and environmental impact of vehicular emissions".
"With this scheme, we hope to nudge car buyers towards cleaner and more environmentally friendly models."
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CEVS, which is due to expire on June 30, 2017, will be extended until Dec 31, 2017.
The Vehicular Emissions Scheme will kick in on Jan 1, 2018 for two years.
Another change is to the Early Turnover Scheme (ETS) for commercial diesel vehicles, which will be enhanced and extended.
Since ETS was introduced in 2013, it has encouraged the replacement of 27,000 older, more pollutive commercial diesel vehicles with cleaner models.
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ETS is due to expire on July 31, 2017, but will be extended until July 31, 2019 for owners with existing Euro II and III diesel vehicles to replace them with Euro VI alternatives, with the COE bonus period for light goods vehicles to be further enhanced. More details will be given at the Committee of Supply debate.
Mr Heng also introduced a volume-based duty on automotive diesel, industrial diesel and the diesel component of biodiesel to encourage lower diesel consumption, starting Feb 20, 2017.
To mitigate the impact of the diesel duty, the annual Special Tax levied on diesel cars and taxis will be reduced permanently.
This tax for diesel cars will be cut by S$100, and for taxis, by S$850 from Feb 20, 2017.
Road tax rebates will be provided over the next three years from Aug 1, 2017 to July 31, 2020 for diesel buses and goods vehicles.
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.
Additional cash rebates will be given to owners of diesel school buses and eligible private-hire or excursion buses used to ferry school children.
The Land Transport Authority said that for the large majority of vehicles, these measures will more than offset the diesel duty incurred in the first year of the duty.
The impending Budget had led to the announcement last Friday that this week's COE bidding exercise would be postponed by two days.
Most car dealers had feared the worst but as it turned out, they did not have to worry.
But not some motorcycle dealers.
Eugene Mah, managing director of established bike player Mah Pte Ltd, said the new taxes will hurt.
"This decision will definitely affect the sales of big bikes and even some smaller bikes, considering they are taxing even the mid-range bikes," he said.
The Triumph Bonneville T100, for example, has an OMV above S$10,000.
Mr Mah said big bikes constitute "about 30 to 40 per cent" of his business, although models with OMV under S$5,000 - like the Taiwan-made SYM Joyride 200 scooter - also make up a sizeable portion of his sales, at "around 30 per cent".
But Anthony Tan, owner of motorcycle trading company Ideal Motoring, said the revised ARF structure is good news for buyers of bread-and-butter models, estimated at up to three-quarters of the bike market, because it may dampen COE premiums.
This group of riders use their machines for transport and work, like delivery and despatch, and are extremely price-sensitive.
Mr Tan added: "If the total cost of the machine plus COE goes above S$10,000, sales are affected."
- Tiered ARF for expensive motorcycles
- No motorcycle COEs for open category quota
- Carbon Emissions-based Vehicle Scheme (CEVS) to be replaced with more holistic scheme
- Early Turnover Scheme (ETS) to be enhanced and extended
- Cut in special tax for diesel cars and taxis
- For more Budget 2017 stories visit bt.sg/budget17
This article was first published on February 21, 2017.
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