How well would

Budget 2023
achieve its aims in
the Car
Market?
By a student
Contents

1 2 3

What are the measures? What is the aim of How do these measures
these measures? achieve the aim?
 Measures introduced:

1. Higher marginal Additional Registration

Fee (ARF) for higher-end and luxury cars.
a. ARF - Additional Registration Fee –
a tax imposed once a vehicle is
registered and is calculated based on
a percentage of the open market
value (OMV) of the car.
b. OMV - the actual price of the
vehicle. This price is not inclusive of
COE, ARF, registration fees, taxes
and surcharges.
Measures introduced:
1. Huh
2. Preferential ARF (PARF) rebates capped at
$60,000.
a. In essence, it means that if you de-register
or scrap a car, the maximum amount you’ll
be able to get back now is S$60,000. In the
past, it could have been up to 75 percent of
the PARF, if you de-registered within five
years, for example.
 Aim of these measures

To discourage the use of cars and reduce

traffic congestion
Also, the tax that the government collects can be used in
a myriad of ways to help the lower income groups and
the ageing population in Singapore.
This can come in the form of building more hospitals
and eldercare facilities.
Moreover, the government can allocate the funds to
public transportation and expand the network.
How do these measures achieve the aim?

As the vehicle tax is imposed, it becomes more

expensive to buy a luxury car and the price of a
luxury car increases. This reduces the willingness
and ability of the consumers to purchase luxury
cars. Hence demand for luxury cars decreases
from D to D’.

Quantity of cars

Market for
luxury cars
What could limit the
effectiveness of these measures?

Since the people who usually buy

luxury cars have extremely high
incomes, the vehicle tax might not
faze them and they might still
decide to purchase luxury cars.
Thus, the aim of this measure
might not be achieved.
 What are possible unintended consequences of these
measures?

As the demand for luxury cars

decreases, less people will own
private vehicles, thus more people
will start utilising public transport,
thus demand for public transport
services will increase.