Car buyers want COE system reviewed

[CityFarmer]

Hi MW, i admire your wife for not demanding a car when you can afford to. Not many woman nowadays can see the long term benefits of saving; the short-term comfort of having a car seems more important than building a retirement nest egg.

My comments would probably sound like sour grapes by the upper income families but i think it is good to stick to a frugal lifestyle. It is almost impossible to give up the car if you have gotton used to it for like 3 or more years.

Yes, I would very much like to give up my car has it not been my wife. I have been dropping hints and ideas to her that that the 1k we spend every month can be put to better use and that its too much to pay for convience. My wife always say, after a few years, u will not be able to get use without a car, but I felt it has never been a issue with me, I grow up a frugal person and if my wife agree, I can sell my car tomorrow. I think she is getting it after my nagging... She agreed that it might not be necessary when our kid is older. It's those who are used to a car since they are a kids that find it difficult to get rid of a car. When I send my car for servicing, I take the bus and mrt instead of taxi, and I enjoy the ride looking out of the windows and staring into space...

Obviously i am a supporter of COE, if you happen to follow my posting by chance.

Much have been said, let me add-on

I gave up driving, and have a new-born baby. Yes, it is quite in-convenience to move around with a baby in pram, either in MRT and bus (during peak hour). I did opt for taxi during peak hour, it worked but taxi is always not around when you need it most , luckily action been done recently to address it.

If COE ever make people consider giving up car ownership to save up the expense, does it indicating that it is working?

There are comments saying COE adds extra cost into business operation. Well, if goods been stuck in traffic jam, and not able to deliver on time, will it cost more to business operation?

[LionFlyer]

There are comments saying COE adds extra cost into business operation. Well, if goods been stuck in traffic jam, and not able to deliver on time, will it cost more to business operation?

Traffic jams happen when COE was at the 5k level and still at the 80k level. It's a issue of road management rather than vehicle population. You can cut vehicle population through reducing the number of COE, but it does not necessarily translate to lesser cars on the CTE at 9am.

Given a choice, I'll rather lower the cost of business (tangible upfront cost) and deal with the road usage issue separately (ERP2).

[CityFarmer]

There are comments saying COE adds extra cost into business operation. Well, if goods been stuck in traffic jam, and not able to deliver on time, will it cost more to business operation?

Traffic jams happen when COE was at the 5k level and still at the 80k level. It's a issue of road management rather than vehicle population. You can cut vehicle population through reducing the number of COE, but it does not necessarily translate to lesser cars on the CTE at 9am.

Given a choice, I'll rather lower the cost of business (tangible upfront cost) and deal with the road usage issue separately (ERP2).

In one occasion, i discussed traffic jam issue with colleagues of mine in China. Not too far into the detail, i found our definition of traffic jam seems not aligning...

In their definition, traffic jam means the driver can open door, pee and come back, still have time for a smoke, before room available to move forward ...

My definition... probably if car move below 30 km/h, I already took it as jam and starting to curse and swear...

[Temperament]

COE practically now favours the very rich. Why must it be this way? Why can't COE be more equitable? If the people can live with COE then why not many other "necessary" services or things base on COE's system too? In fact in a way, many services and things are already like that or almost like that. (Sound like promoting or favouring "Communism"?)
And the very rich have got no problem because they are rich means usually they run their own businesses. So they will pass the costs of owning cars back to the people, one way or another. Not to mention about the PAPYS & Elites. They are in the best positions in Sink apore. IMO.

[HitandRun]

Ultimately, it depends on ones' definition of car ownership. Is it a necessity or luxury?

Somehow, I cannot reconcile with folks' thinking that owning a car, in particular, a NEW car is a fundamental necessity and right. Even though I can easily afford a new car, I too, bought my car secondhand. And I've only gotten my driving license and bought my first car after my wife gave birth to my second kid.....

[Temperament]

Somehow, I cannot reconcile with folks' thinking that owning a car, in particular, a NEW car is a fundamental necessity and right

Of course, we all have to agree with you, owning a NEW car is not a fundamental necessity. On the other hand the cars shouldn't be priced the other way either. Now it seems only the very rich have the rights to owning a new car and nobody else. (Of course the Papys & Associates too have the rights).
Further more, how many people in sale/outdoor service, etc.. need a car too?

Like i said if GOV can do this with cars, it can do it with anything too. May be to hospital medical services too. Which Papys have done it in a way; only not as bad or obvious as COE system. Just see what's the change coming; Papys can think of making the people more and more dependent on them(The Papys). Just you wait & watch lol!

[camelking]

come 2015, government will definitely increase the quota for COE especially for Cat A.
Don't worry, another theory will be spin to justify the dramatic increase in COE then.
Else, how to win the election in 2016?

People tend to have short memory.
So, why release the quota now?
20/80 rule!

[d.o.g.]

Agreed. Personally this is the best form of luxury tax in a larger perspectives. It's effectiveness is awesome.
We need to use the money more effectively to further improve public transport such that family travel can be easier.

It seems people have forgotten that before COE there was ARF and PARF etc which essentially tripled the price of a car instead of "merely" adding $20k -100k to the price of a car.

You might ask - why did the government move away from tripling car prices to a COE-based system? One possible reason: tripling car prices hurt the rich the most, since they bought the most expensive cars. Who do the rich befriend? Those in power. Who changes the laws? Those in power.

So what do we have with the COE? We have "a broader tax base" which maximizes government revenue, and coincidentally reduces the tax burden on the rich. With the old system people paid $50k for a Honda Civic and $2m for a Ferrari. With the COE system today, you pay $100k+ for a Honda Civic, and $1.2m for a Ferrari. Under the COE system the middle class subsidizes the rich. It is a regressive tax because it costs the most for those least able to afford it.

Has the COE system been effective in improving traffic flow? Of course not. If it has there would be no need to widen the CTE, demolish Bukit Brown etc.

Many people have noted that Hong Kong has managed to keep congestion down without any form of COE whatsoever. Why? Because public transport in Hong Kong is competitive - the tram, MTR, bus, minibus and taxis all compete fiercely for business. They all run parallel routes so if there is a problem on one system the commuters can switch. As a result there is less need to own a car, and then the congestion becomes a big discouragement to own a car.

In Singapore, despite the traffic congestion people still buy cars because the public transport system is not reliable enough, there is no Plan B. When the MRT broke down there were no alternative bus routes because SMRT and SBS Transit both killed the bus trunk routes in order to drive traffic to their MRT lines. The LTA has not learnt anything, as it has not directed either company to run bus routes parallel to their MRT lines. So clearly when another breakdown occurs there will again be massive problems.

You think there will not be another breakdown? Right after the SMRT CEO says they will focus on being a public transport company, their 70%-owned JV with NTUC wins the contract to manage RETAIL space at the Sports Hub. So clearly they are not devoting their full resources to the train/bus operations. Which means another breakdown will come sooner rather than later. That should explain why people still buy cars - because they have NO CONFIDENCE in the public transport system.

(The cynic might say: Well, that means I should buy SMRT shares, because clearly the government appears more concerned about them staying profitable than being a reliable public transport operator!)

Also, those who think that COE money is used to improve public transport are mistaken. All government revenues are pooled into the Consolidated Fund from which allocations are made separately. Separating collection from funding is more efficient because some departments generate far more revenue than they use e.g. LTA (COE), JTC (land sale), IRAS (income tax) while others spend much more than they collect e.g. MOE (schools), MOH (hospitals).

Education and health are considered public goods so the government is willing to subsidize them. Tobacco and alcohol are considered negative goods so the government taxes them extra to discourage consumption and raise additional revenue. Again, tobacco taxes are not used to pay for lung cancer treatment, and alcohol taxes do not fund anti-alcoholism campaigns. All the money goes to the Consolidated Fund. It's very communist in this way: "from each according to his abilities, to each according to his needs".

As usual, YMMV.

[HitandRun]

As usual, YMMV.

My mileage definitely varies.

There are 2 points I like to address:

a. Should we tax the rich more and in all ways? Including the water they drink, the rice they buy, etc? I wouldn't suggest it. Money tend to go where it is treated best. If high taxation is the best policy, the highly taxed western developed countries would not be in the economic malaise that they are in now. And Gerard Depardieu wouldn't declare that he would like to be a Belgian resident instead.

My argument is that COE does not subsidise the rich, it merely serves to even the playing ground (PARF still taxed the rich more) for a luxury item. And since it is a luxury item, the government has no business subsidising anyone, especially those who cannot afford it. And if a Honda Civic is still retailing at $50k, I'm sure our traffic jams would be similar to KL, Bangkok, Shanghai, etc., if not worse.

b. If you compare public transport in HKG vs SGP, you will realise that it is more expensive to take a cab or the MTR in Hong Kong. Given that per capita GDP is 20% lower in HKG, I believe that there is a lot of monetary incentive for private businesses to compete (in the public transport sector). To achieve pricing parity with HKG, SGP transport operators will probably have to raise prices by 50% (according to my back of napkin calculation).

Having said that, I am not suggesting that the transport operators are trying or have tried their best. But given the current situation and how the PTC set the pricing model, they appear to have not much incentive to compete or provide better services.

[freedom]

to tax the rich higher does not limit the number of cars on road. Also, does a Ferrari cause more traffic jam than a Honda Civic? Of course, it made sense for luxury tax, but surely, it would not help the traffic today. COE from a traffic perspective, is rather a fairer system.

And if we are saying the middle-class is subsidizing the rich, can we say that the rich was subsidizing everyone not rich? That's not capitalism, that's socialism. I don't think that anyone is subsidizing anyone else.