Minister Lui’s COE accounting misleading

I refer to the 9 Oct 2014 Straits Times report “Citizens account for more than 80% of COE purchases”.

Minister Lui reported that we the 61% citizens are taking up more than 80% of the COEs. He seems to be saying that we citizens are taking more than our fair share of COEs.

Minister Lui’s figures are as follows:

Citizens PRs Non-PRs
People (%) 61 9.6 29.4
Cat A COE (%) 89 9 2
Cat B COE (%) 84 12 5

But non-PRs comprise of:

Domestic helper 14%
Construction, marine sectors 46%
S pass 8%
Employment pass 12%
Children 21%

Source: http://population.sg/resources/population-composition/#.VDadzLCUd9o

Domestic helpers, construction workers and S pass workers are low wage foreign workers who have no reason to want COEs. Similarly, non-PR children should also have no need for COEs. They should be excluded from comparison. However, if non-PR children are excluded, children of citizens and PRs should also be excluded. But there is no separate information on citizens’ children or PRs’ children as they are normally lumped together as one.

So the only thing that can be compared based on Minister’s Lui’s information is citizens and PRs.

Citizens PRs
Population (%) 86 14
Cat A COE (%) 91 9
Cat B COE (%) 88 13

From the table above, it can be seen that the % take up of COEs by citizens is generally in line with its share of the population.

But that’s beside the point. Why should a precious national ‘resource’ like the COE be shared in the same proportion amongst citizens, PRs and non-PRs? Citizens by virtue of their status should get a higher proportion of COEs.

Suggestions on COEs

COE allocation should first and foremost be based on citizenship. Citizens should be allocated most of the COEs with the rest shared amongst PRs and non-PRs. COE allocation amongst citizens should be by income. The following COE categories are suggested:

• Category 1: Citizen, annual income $1 million and above
• Category 2: Citizen, annual income at least $500,000 but less than $1 million
• Category 3: Citizen, annual income at least $250,000 but less than $500,000
• Category 4: Citizen, annual income at least $150,000 but less than $250,000
• Category 5: Citizen, annual income at least $100,000 but less than $150,000
• Category 6: Citizen, annual income at least $50,000 but less than $100,000
• Category 7: Citizen, annual income less than $50,000
• Category 8: Non-citizens
• Category 9: Motorcycles
• Category 10: Company vehicles, taxis, buses

Citizenship

• Citizenship can be easily identified using the NRIC or FIN
• Categories 1 to 7 should be allotted a total of 92% of the private car quota
• Apportionment of quota amongst categories 1 to 7 should be in proportion to their actual population ratios. This information is readily available from IRAS. The information may be a year old but population ratio by income shouldn’t shift dramatically from year to year
• Category 8 should be allotted 8% of the private car quota
• The exact percentages can be adjusted according to changes in population ratios

Annual income

• Annual income can be easily ascertained through the income tax
• A housewife can purchase a car at the lowest income bracket. That’s ok because a housewife is entitled to purchase a car to fetch her children around
• If a person gets promoted to the next income bracket, the new income tax won’t show until the following year so he has a year to buy a car within his or her old income bracket

Fairness

• The effect of this allocation is that COE price will vary widely between Categories 1 and 7. While we may end up with much cheaper COEs in Category 7, COE in Category 1 may shoot up to $1 million. The overall effect could be an increase, not a decrease in COE coffers.
• The fairness of the system is similar to that of the progressive income tax system where the rich pay more, the poor pay less.
• It is also similar to the HDB allocation system where different income brackets are set for different flat categories
• There is nothing to stop the ordinary man on the street from re-selling his COE + car to someone in the higher categories. The higher category man gets his COE + car while the man on the street gets to earn some pocket money. Both are happy.

Multiple car ownership
• 2nd car: Top up 50% of prevailing COE or $25,000 whichever is higher
• 3rd car: Top up 200% of prevailing COE or $100,000 whichever is higher
• 4th car: Top up 400% of prevailing COE or $200,000 whichever is higher
• 5th car: Top up 800% of prevailing COE or $400,000 whichever is higher
• 6th car: Top up 1,600% of prevailing COE or $800,000 whichever is higher

No more than 6 cars for any person no matter how rich he or she is.

Straits Times, Citizens account for more than 80% of COE purchases, 9 Oct 2014

FOREIGNERS tend to steer towards bigger cars, but Singapore citizens still make up the bulk of new car purchases.

Citizens, who make up 61 per cent of the total population, accounted for more than 80 per cent of new car registrations in 2012, 2013 and the first eight months of this year, said Transport Minister Lui Tuck Yew.

He gave the figures on Tuesday when replying to opposition MP Sylvia Lim (Aljunied GRC).

More specifically, citizens accounted for 89 per cent of Category A cars (up to 1,600cc and 130bhp) and 84 per cent of Category B cars (above 1,600cc or 130bhp).

Non-citizens make up the rest.

Among them, permanent residents (PRs) – who form 9.6 per cent of the population – accounted for 9 per cent in Category A and 12 per cent in Category B registrations. For non-resident foreigners, the respective figures are 2 per cent and 5 per cent. The numbers exclude cars registered to companies.

Motor dealers such as Cycle & Carriage (Mercedes-Benz, Kia, Mitsubishi), Performance Motors (BMW) and Wearnes Automotive (Bentley, Land Rover, Jaguar, McLaren, Infiniti, Volvo) have noticed more foreigners in their showrooms in recent years.

They tend to be largely from China, India and Indonesia, they said. But Ferrari agent Ital Auto said Singaporeans still form the vast majority of its buyers.

Said its marketing manager Nicholas Syn: “Foreigners are painfully aware of what cars cost back home, or in the region.

“A quarter-million euro sports car in Europe could easily cost $1.3 million here.”

The statistics Mr Lui cited also show a disproportionately large percentage of PRs registering commercial vehicles.

Between 2012 and August this year, they accounted for 32 per cent of non-company registrations of vans, trucks and buses.

Most commercial vehicles are registered to companies, but hawkers and owner-operators of heavy trucks can register these vehicles in their own name.

Explaining the phenomenon, National University of Singapore transport researcher Lee Der Horng said PRs may be more disposed to businesses that require the use of such vehicles. “No matter what, the figure is high,” he said. “Does this imply that Singaporeans are moving away from certain types of business?”

On the other hand, Dr Lee was not surprised that PRs were getting more Category B certificates of entitlement than A.

“PRs with the choice of car ownership can afford bigger cars because of their economic standing,” he said, noting that Singapore is selective in picking its PRs, who tend to be more talented, more educated or better paid.

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