SINGAPORE: The proposal by the Progress Singapore Party (PSP) to set up a certificate of entitlement (COE) credit system may be well-intentioned, but is “unlikely to be effective in practice”, said Senior Minister of State for Transport Amy Khor.
She was responding to suggestions by PSP on how to create a more equitable COE system for private vehicles which were raised by Non-Constituency Member of Parliament Hazel Poa at an adjournment motion in parliament on Tuesday (Jan 7).
The proposed COE system would use “COE credits” instead of cash for bidding, said Ms Poa.
These credits were proposed to be distributed by the government to adult Singapore citizens and permanent residents each month, and the number of credits received by each individual would depend on various factors such as their nationality, their age, the number of children they have and whether or not they have any disabilities, among other considerations.
For illustration purposes, Ms Poa suggested that 100 credits be distributed to each adult Singapore citizen and 70 to each adult PR. Those with children aged 12 and under could get an additional 200 credits per child who is a citizen, and 140 per child who is a PR.
Senior citizens above the retirement age could get an additional 100 credits, and those who have mobility impairments, such as those who qualify for Class 1 or Class 2 car park labels for the disabled, could get an additional 200 credits.
“These examples given are not exhaustive, but serve to illustrate how we can use this system to take into account needs and social contributions, and make it less costly for those with greater need to own a vehicle,” she said.
She added that the proposed credits would also be transferable. For instance, families could pool their COE credits together to bid for a vehicle.
Credits could also be traded – those who want to own a vehicle could buy the COE credits from those who do not, in order to submit higher bids.
“Under this system, unavoidably, those who are financially better off would still be better able to acquire a COE, although it is ameliorated to some extent by distributing COE credits based on needs factors,” said Ms Poa.
Ms Poa also proposed that to reduce the impact of the proposed new COE system on government revenue, a base fee be collected per COE. This could be either a flat rate depending on the COE category, or a percentage of the car’s open market value.
Even with the base fee, Ms Poa noted that there would still be some loss of revenue for the government.
In response, Dr Khor noted that under the proposal, those who want to own a car can buy COE credits from those who do not.
The net effect would be that the people who would be able to acquire COEs would still be those who were willing and able to pay for them, she said.
“Their proposal may potentially drive the price of credits underground, where the prices of the credits become opaque and unknowing consumers get fleeced – akin, for instance, to the price gouging of Taylor Swift concert tickets last year,” said Dr Khor.
She added that a COE under such circumstances may “well cost even more than today”, and that to guard against black markets for credits, a whole new trading and enforcement regime may need to be set up, which would “ultimately cost taxpayers even more”.
