Thursday, 26 February 2015

Budget - COE

I do not know if the COE premiums were ever intended to be a significant revenue stream.

Whatever the original intent, it is now.

COE (Vehicle Quota Premiums) contributed $6.1b to the government revenue in 2014.
It is expected to contribute a similar amount in 2015.
Source: ST interactive

At 9.5% of government revenue it is the 4th largest component of revenue after Corporate tax, GST, and Personal Income Tax.

And with the Budget proposal for 2015 projected to incur a deficit of $6.7b, the $6.1b from COE becomes critical... and indispensable.

Which means... the COE is going to remain with us for some time. the government can't afford to lose almost 10% of it's revenue!

Which means alternative schemes to tweak the COE is not likely to be adopted if they may adversely affect the COE revenue.

Or proposals to smoothen the COE supply will be assess with an eye on the revenue stream and whether it would be disrupted.

So if you are hoping for the COE to come down... be aware that the government is betting against you.

But you already know that.

[Afternote: ERP collection is just a drop in the bucket compared to COE premiums:
The Government collected S$152 million in Electronic Road Pricing (ERP) revenue last year, which is a dip from the S$160 million consistently collected in preceding years, said Transport Minister Lui Tuck Yew to Parliament on Wednesday (Mar 11).]

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