Most respondents support the proposed rebate-surcharge scheme for the Certificate of Entitlement (COE) system in Singapore, with the majority favouring a five-band structure, Minister for Transport Jeffrey Siow said in Parliament on November 3rd.

This follows a public consultation conducted by the Land Transport Authority (LTA) from October 8th to November 2nd.

On October 8th, the LTA announced proposed changes to the COE system, including the merger of the mainstream and luxury car bidding categories and the introduction of rebates or surcharges based on a car's open market value (OMV).

Under the proposal, cars would be classified into different bands according to their OMV. Mass-market cars would qualify for rebates of up to SGD 15,000 (US$ 11,720), while luxury cars would incur surcharges of up to SGD 15,000. The changes are intended to differentiate COE premiums between mass-market and higher-end cars.

Treatment of taxis remains under review

Siow also responded to several questions from Members of Parliament regarding the COE review.

Jamus Lim, Workers' Party MP for Sengkang GRC, asked how taxis and private-hire cars (PHCs) would be treated under the proposed rebate-surcharge framework. Siow said the treatment of taxis was still under review, while PHCs would not be assigned a separate COE category.

"PHCs, on the other hand, are private cars with the added flexibility to be used for private hire, so they are not totally like taxis, which cannot be for private use," Siow said.

He added that the Government had considered creating a separate COE category for PHCs but decided against the proposal, as it could restrict the supply of COEs for these vehicles. This could increase rental costs for PHC drivers and fares for commuters, including those who do not own a car or cannot drive.

Responding to questions from Choo Pei Ling, MP for Chua Chu Kang GRC, Siow said a separate rebate-surcharge structure for electric vehicles (EVs) would not be introduced, as it would "overcomplicate the system". The Government would continue to support EV adoption through the Vehicular Emissions Scheme (VES).

The VES, which is scheduled to run until the end of 2027, provides incentives of up to SGD 22,500 for cleaner cars and imposes penalties of up to SGD 35,000 for more polluting vehicles.

Edward Chia, MP for Holland-Bukit Timah GRC, suggested calculating rebates and surcharges as a percentage rather than as fixed amounts. Siow said this approach could further reduce cliff effects. However, buyers would not know the applicable rebate or surcharge amount before the start of the COE bidding exercise.