While some motorists bemoan what they feel is an ineffective utilisation of vehicles as “status symbols”, one economist said that a byproduct of higher COE prices could also inadvertently lead to higher vehicle usage.
A 2019 study, conducted by researchers from the National University of Singapore (NUS) and NTU, showed that people who bought cars when COEs were high tended to use their cars more.
“Our interpretation of the behaviour is that (drivers) felt that, having spent so much money, they ought to make full use of their cars,” said Distinguished Professor Ivan Png from the School of Business and Departments of Economics and Information Systems and Analytics at NUS, who was part of the study.
He told TODAY that COEs are “a very crude way” of managing congestion and emissions.
“Controlling the number of vehicles is not the right way, controlling usage is the correct way.”
Prof Png said that while the Electronic Road Pricing (ERP) system seeks to control usage, it could be improved. He noted that the authorities had planned to introduce a satellite-based ERP system, but that it had been continually delayed.
LTA had said in 2021 that the new ERP system would be delayed for at least one-and-a-half years owing to the worsening global shortage of microchips.
Mr Lim, the MP, said that it is not necessarily true that car owners would want to drive their vehicles more regularly just to maximise the value of the COE.
“At the end of the day, LTA uses a mix of measures to manage traffic on the roads.”
Other than the ERP system, drivers also need to pay for their petrol and parking which is “still fairly expensive”.
Mr Lim added that while many do perceive a car to be the most convenient transport mode, the fact is that LTA has also taken measures to ensure that public transport remains affordable and accessible, and is encouraging more people to take public transport or even cycle to reduce their carbon footprint.
“All these measures will take time to be effective and I think we should allow these policies to have greater impact in the mid and longer term.”
And while some may see their vehicles as a status symbol, others are also keen to do their part to “save the environment by not driving”, he added.
Mr Lim said that given time, he hopes that COE prices will gradually settle down due to the stabilisation measures introduced at the start of the year.
“However, if prices remain sky high, as an MP, I will engage LTA to review the measures to manage COE prices,” he added.
MAKING SYSTEM WORK BETTER
As COE prices soar in recent months, there has been no shortage of suggestions from motorists and car dealers on how to improve the system.
These range from imposing additional costs on those who buy more than one car to putting a cap on the private-hire vehicle fleet.
But how feasible are the proposals, some of which had been mooted some years back and have resurfaced amid the spotlight on the record COE prices?
Suggestion #1: Introducing an additional tax for people who buy more than one car, much like the Additional Buyer’s Stamp Duty for properties
Associate Professor Raymond Ong, from the Department of Civil and Environmental Engineering at NUS, said this suggestion could be feasible to implement, but questioned its impact on COE prices.
“It would be a differentiator between those who can buy the first car and those who own more than one car, with a tiered additional car fee for the (subsequent car purchase).”
He added that the effectiveness of the policy would depend on how many such owners exist in the market.
“If this is the minority, it will have little impact on COE prices.”
Suggestion #2: Ensuring each family has no more than one car
This is not feasible, given that currently, the car ownership per household ratio is less than one, which means that on average, a household owns less than one car, said Assoc Prof Ong.
“This will create a totally wrong signal that one household can own a car, which is contrary to our car-lite policy,” he said.
Suggestion #3: COE rebates for certain groups that really need a car, such as young families, or families with elderly or people with disabilities (PWDs)
Assoc Prof Ong said that such a policy will be difficult to implement, as it would be challenging to make a distinction between those who are deserving of the rebate and those who are not, and the rebate amount itself.
He added that the current policy is favoured towards improving the public transport system and shared mobility network to help young families and families with elderly folks or PWDs, rather than providing them rebates.
This is partly because, from a usage perspective, it is still unclear what is the proportion of trips and average trip distance per week that families with young children, the elderly, and PWDs need to travel.
“We need more data to evaluate if there is indeed a need on a daily basis or on a seasonal basis to evaluate the viability of this option.”
Overall, Assoc Prof Theseira from SUSS said that suggestions #1 to #3 are ineffective, as they hinge upon the identity of the buyer, and any benefits gained from them can easily be abused.
“Unlike property, cars are movable, tradeable and utilisable by people who are not the registered owner,” he said.
For instance, should suggestion #3 come into effect, a car buyer who wishes to obtain a car at a cheaper COE rate could simply pay a family with young children to help them obtain a car with a COE rebate.
