Ms Sylvia Lim (Aljunied): Madam, the current formula for road tax for EVs consists of two components. The first requires a computation based on car’s power rating.
The second is a figure to be added, called the additional annual fixed component (AAFC). The AAFC is fixed from this year as $700 per year. This has caused some unhappiness among EV owners due to the weakness of the principle behind imposing the AAFC.
In the Parliamentary answer to Sengkang Member of Parliament Mr Louis Chua in May 2021, MOT stated that the AAFC sought to put EV users on par with those using internal combustion engine (ICE) vehicles.
As ICE vehicle users paid fuel excise duties at the pump, but EV users did not, AAFC was added to put both categories of vehicle users on par. MOT stressed then that the AAFC was not punitive but was an interim measure. However, some EV owners find it punitive as the AAFC arbitrarily raises their road tax by as much as one-third despite the whole-of-Government avowed push towards green policies and clean energy.
I understood from the Budget Statement in 2020 that the end game for road tax on EVs is distance-based charging using the next-generation Electronic Road Pricing (ERP) system. However, in a Parliamentary answer to Member of Parliament Mr Louis Chua in 2021, the Government stated that it was studying different approaches and options for distance-based charging that were fuel independent. Would the Ministry clarify what this means exactly?
Ministry of Transport
2 March 2023