Diesel tax will add to costs, say cabbies

Cabbies expect their earnings will take a hit, despite reductions in their daily rental rates, with the new usage-based diesel duty imposed on Monday.

This is because of the high mileage they clock, which erodes any savings they have from the $2 to $2.30 cut in daily rentals, the National Taxi Association (NTA) and its members said yesterday.

About 86 per cent of the island's 27,500 taxis run on diesel.

A volume-based diesel duty of 10 cents a litre was announced during Monday's Budget to encourage motorists to use the fuel more prudently, and hence reduce its pollutive effects. To mitigate the new levy, the Government also permanently reduced the yearly Special Tax for diesel taxis by $850. Taxi firms subsequently pass on these savings to the cabbies in the form of rental reductions.

Read also: Budget 2017: 5 things that may affect you directly

But the concessions may not be enough for some, said NTA executive adviser Ang Hin Kee, following a meeting with drivers yesterday.

"Cabbies have said that to cover the (higher costs from the) diesel tax, they may have to drive longer hours and distances. This may be contrary to the objective of the diesel tax," said Mr Ang, who is also an MP for Ang Mo Kio GRC.

Take Trans-Cab taxi driver Patrick Teo, 53, for instance. He clocks about 300km every day, requiring about 33 litres of diesel.

Read also: Cab firms to pass on savings from cut in diesel tax

With the levy, he now has to pay an added $3.30 a day - a dollar more than the $2.30 reduction in daily rental Trans-Cab has granted its diesel taxi hirers. This amounts to about $30 more in monthly costs. Mr Teo said he expects to "drive more", but was unable to say how much farther.

"The more I drive, the more diesel tax I pay," he added.

Taxi drivers said previously that their incomes have already fallen by between 20 per cent and 30 per cent because of competition from private-hire car services. To help cabbies, Mr Ang said taxi firms should look into progressively replacing their older, less efficient diesel taxis with newer models, or petrol-hybrid ones, which use less fuel.

Nearly half of SMRT's fleet of more than 3,400 taxis are eco- friendly models such as the Toyota Prius hybrid. This reduces its reliance on diesel.

The company has reduced daily rentals for its diesel cabs by $2, with a separate $10 increase of monthly Medisave top-ups for drivers.

Mr Ang said taxi firms could also look into more efficiently matching their drivers with booking jobs, to reduce empty cruising. "Most drivers agree that the diesel tax is good for the environment, but there is a cost implication," he said.

This article was first published on Feb 23, 2017.
Get a copy of The Straits Times or go to straitstimes.com for more stories.