No separate COE category/Gahmen reviewing COE

[Khimwoon]

  On 2/5/2013 at 9:58 AM, Alheych said:

actually, there was an ST article which recommended such a system last year, and i agree with it. tying COE to engine capacity is really archaic.

 

COE system should really stop helping Volvo S80 T4, C180 1.6, and BMW 316i.

 

Tie COE to cost of car, not engine size

By Julian Wright, The Straits Times, 5 May 2012

 

IT WAS recently reported in The Straits Times that upmarket marques now make up 45 per cent of sales in the up-to-1,600cc category, up from just 0.3 per cent in 2007. Buyers and sellers of bigger and more luxurious cars are also outbidding the others for certificates of entitlement (COEs) in the Open category, which can be used for any vehicle type but end up almost exclusively being used for bigger cars. The result is that some low-end makes that appeal to budget-conscious buyers are struggling or leaving the market.

 

The high prices of cars due to the bidding up of COEs has led some to suggest balloting as the solution, as Mr Chan Tau Chou did in a letter to The Straits Times Forum page last month. But balloting leads to problems. It would create a black market in which cars would still trade at roughly the same price as today, reflecting that the underlying supply and demand would not have changed, a point also made by other writers to the Forum Page such as Mr Goh Juanq Long and Mr Patrick Low.

 

The main effect of balloting would be to shift the revenue currently generated for the Government to those lucky enough to win the ballot (as they could resell their COEs to the highest bidder).

 

If COEs were instead tagged to the person rather than the car to make them non-transferable so as to avoid this problem, as has been suggested by Mr Martin Lee in the Forum Page, then balloting would mean those who really need a car (possibly for their livelihood) may simply miss out, while the winners of the ballot may obtain a car regardless of their particular needs or their willingness to pay. This is not only unfair, but also economically inefficient.

 

I think quite a different solution is called for. The one I propose seeks to address the problem that prices of COEs that apply to basic car models are being driven up by the high demand for luxury cars. Until recently, this concern had been dealt with by creating two different categories of COEs: Category A (cars with engine size not exceeding 1,600cc) and Category B (cars with engine sizes above 1,600cc). The theory was that the rich would want big cars and so would bid up the price of Category B COEs, while leaving the price of Category A COEs largely unaffected. The problem with this approach was that oil prices tripled from 2004 to 2008, causing luxury carmakers to produce more luxury cars with smaller engine sizes. This resulted in more and more marquee brands selling cars in the small-car category.

 

My proposal would allow the authorities to do away with categories A and B (and the Open category), so engine size need no longer be the deciding factor in the COE paid. Rather, the COE price would be tied to the underlying cost of a car; that is, the open market value (or OMV) as assessed by Singapore Customs. This is the cost to the importer (before taxes) of bringing a car into Singapore. This is how goods and services tax (GST), custom duty and the additional registration fee are currently computed for cars in Singapore. The COE would therefore no longer be a dollar amount but a percentage amount. The more expensive the car, the higher the COE premium.

 

Each bidder (individual or car dealer) in a COE auction would bid a percentage amount for a COE. Someone might bid 142 per cent of OMV, someone else 228 per cent. Bids would increase in increments of basis points instead of dollars during the bidding process. The highest percentage bids win.

 

The prevailing quota premium would be the percentage amount at which the number of bids for higher percentage amounts equals the quota of COEs available. All those bidding percentage amounts above the prevailing quota premium would receive a COE and they (or their dealer) would pay the prevailing quota premium, as that percentage on top of the OMV for the particular vehicle they choose.

 

 

 

To see the possible implications of such a scheme, consider six different cars, the first three belonging to the small-car category and the remaining three belonging to the large-car category (see table). The OMVs are taken from the One Motoring website for cars registered in March 2012. The COEs are taken from the latest bidding round - April 2012, second bidding. Consider how things would change if bidding was based on a percentage of OMV instead. For the sake of argument, suppose the prevailing quota premium that resulted from the bidding was 200 per cent. The implied COEs under a percentage COE scheme are given in the table, along with the predicted change to car prices.

 

Of course the example is only meant to be illustrative. Regardless of the exact numbers, the point is that consumers who choose to buy luxury cars will need to pay more for a COE and those buying cheaper models will pay less. Government revenues (which depend on the average COE prices across all cars sold) may not change all that much, even though the median car price should fall.

 

The writer is a professor in the Department of Economics, National University of Singapore.

 

Then u see everyone under declaring their import value.

 

[Givechance]

Just remove ARF, and the undeclared OMV by importers will have less impetus.

artificial taxes and PARF scheme are creating a confusing issue for many car buyers here.

Edited February 6, 2013 by Givechance

[Jojoman]

  On 2/5/2013 at 7:38 AM, Turboflat4 said:

I oso say. COE at least can blame market forces. ARF is sheer-profiteering.

 

I say: remove all import duties, keep COE if they must, but disallow dealer-bidding. So there!

I say: remove all import duties, keep COE if they must, but disallow dealer-bidding. So there!

fully agree!!!

[Jojoman]

COE has to change or drop....

we singaproean are getting colder by the day..

i will teach my chidlrens to be cold toward politic!

[Cluboxed]

COE can be pro-rated upon scrap...but import duty taxes cant,,,

[Cars08]

  On 2/5/2013 at 8:58 AM, Beehive3783 said:

I saw Lim Sia Suay sleeping while watching the news yesterday. Really sia suay

He's not sleeping but in deep tots...

[Civic6228]

Simple economic term .... supply and demand ....

 

What cause the high price for COE today ? Simple, the reduction of Quotas.... What cause the low price of COE in Y2009 ? Economic situation and lack of demand.

 

Review the quotas release from Y2001 to Y2010, factor in the negative growth and average the figures and release the quotas. This will balance off the incorrect projections in Y2006 to Y2009 and eliminate the vicious cycle that we are seeing with the supply of the quotas. Low Supply/High demand ..... surely the price will increase. The critical issue here is also whether the authority are prepared to lose the revenue which is wrong as COE was not meant to be a revenue generating policy but a control tool for the car population in Singapore.

 

I do not understand how reviewing/changing the catergories of COE would help the current situation. There have so many scholars ..... and it surprises me that they cannot even understand the basic of economics ....

[Warthog]

Just impose a sales tax on car. Higher price cars pay higher taxes, vice versa.

 

Easy to implement and administer.

[Yeshe]

  On 2/5/2013 at 7:42 AM, Wt_know said:

yalor, i wonder why the MP did not ask a more sensible question like

 

a. ban dealer to bid coe

b. pay as you bid

c. other cooling measure like limit loan and additional tax for 2nd & 3rd car ...

 

i want to hear minister answer

 

cannot cannot, all these suggestions will open up a can of worms.

then will picha the COE " golden goose " lobang leow

 

 

[Mockngbrd]

  On 2/6/2013 at 3:04 AM, Yeshe said:

cannot cannot, all these suggestions will open up a can of worms.

then will picha the COE " golden goose " lobang leow

 

  Quote

a. ban dealer to bid coe

b. pay as you bid

c. other cooling measure like limit loan and additional tax for 2nd & 3rd car ...

 

Goody goody for richie rich

[Warthog]

  On 2/6/2013 at 3:02 AM, Cscbb said:

ARF is already a tax. And GST, imposed on the OMV, is a sales tax.

 

The one viable way forward is to impose environment or congestion levy for 'high OMV' or high carbon emissions private cars down the road. Or higher GST on those categories.

Come on, 7% gst on omv is peanuts. I am not suggesting to abolish gst, coe or ARF.

 

I am talking about sales tax on your net car price after COE. It can be a progressive tax like 10% for the 1st $100,000, 15% for the next $30,000, or whatever.

[Kar_lover]

  On 2/6/2013 at 1:59 AM, Warthog said:

Just impose a sales tax on car. Higher price cars pay higher taxes, vice versa.

 

Easy to implement and administer.

 

So you are saying no need any quota system? As long as can and willing to pay the tax then can buy? Are you sure??

[Kar_lover]

  On 2/6/2013 at 3:41 AM, Warthog said:

Come on, 7% gst on omv is peanuts. I am not suggesting to abolish gst, coe or ARF.

 

I am talking about sales tax on your net car price after COE. It can be a progressive tax like 10% for the 1st $100,000, 15% for the next $30,000, or whatever.

 

What is the point of putting another tax after the COE? You can always make the ARF progressive. Like first $20k OMV will be 100% ARF, next $30k will be 150% after that 200%.

 

So $100k OMV car will pay $20k + $45k + $100K ARF = $165k ARF. Added to original $100k omv + $7k GST + $100k COE = $372k basic cost (before dealer premium).

[Maseratigood]

  On 2/5/2013 at 6:23 AM, Acemundo said:

i am just amazed a doctorate can SEE merit in such a proposal which can be so easily abused.

Maybe this person is confused, thinking since HdB gives grant to first timers, so COE can be given to first time car buyer also?

 

[Elmo]

What if the amount you pay for COE cannot be pro-rated or recovered when you sell the car?

E.g. I bidded $90K for COE. When I sell the car to B, say after 1 year, I only get back the paper value, with PARF etc but zero for the COE component. Straightaway lugi $90K.

 

However B has to pay $81K COE to LTA as the car has 9 years left from its initial registration. Plus the paper value and what not to seller.

 

LTA will love this scheme deep deep. Because they can earn multiple times from the same car but of course with this, I don't think anyone will be siao enough to bid ridiculous price for the COE. A lot to lose and hard to sell.

 

What you guys think?

[Warthog]

  On 2/6/2013 at 4:58 AM, Kar_lover said:

What is the point of putting another tax after the COE? You can always make the ARF progressive. Like first $20k OMV will be 100% ARF, next $30k will be 150% after that 200%.

 

So $100k OMV car will pay $20k + $45k + $100K ARF = $165k ARF. Added to original $100k omv + $7k GST + $100k COE = $372k basic cost (before dealer premium).

Tax on OMV is a flawed system because OMV price can be manipulated. But tax on final price sold is not sold easy to be fixed.

 

 

 

 

[Nhyone]

I find that the ideas to reallocate the COE don't really address the root cause -- too few COE currently. Reallocation just favours one group over another. And some of the ideas are really easy to game.

 

My thinking is that LTA needs to increase the COE. How? By offering incentives for current car owners to scrap their cars early.

 

LTA has earned enough from COE. It's time for them to give something back.

[Eyke]

  On 2/6/2013 at 9:44 AM, Nhyone said:

My thinking is that LTA needs to increase the COE. How? By offering incentives for current car owners to scrap their cars early.

 

so after car owners scrap their cars early, what do u tink they will do next?